There is a risk on the upside: CK Narayan, Sharayans Resources

CK Narayan, president Treasury, Sharayans Resources, in a chat with ET Now talks about the markets.

If you still have insurance money sitting on the sidelines slowly and steadily, it will find its way in. Is there a case for the bear trader to actually go out and aggressive short a market where you have huge risks of the upside, not necessarily the upside will come but definitely the risk of upside movement?

I agree completely, what you say is completely logical and that has how things have happened. There is certainly a risk to the upside and that is why the bears have not really turned aggressive. If you look at the futures option data also, it has been pretty steady, the Nifty Futures levels have been around let’s say 2.5 crore shares to 2.75 crore shares which has been steady.

Much of that is a position which is getting rolled forward month on month and seems to be largely a hedge position and not really a direction position. Bears do realise the kind of risks because this whole rally is seeing a circuit of liquidity and the liquidity situation is large enough to counteract whatever misgivings are there on the valuations side. So people do appreciate that risk and that is why there is room on the upside. But it will be a trade off between how people see the valuation part and whether they abandon the prudent levels that they have been adhering to so far and just go after and create the momentum or they still stick with the same mindset and have the small upside cuts.

That is a little difficult to call right now but as long as you have this huge overhand of liquidity, the downside remains capped.