Derivatives Weekly View (June 19): Nifty move may continue towards 10500 with support at 10100... - ICICI Securities

Nifty move may continue towards 10500 with support at 10100

The Nifty exhibited noteworthy strength in the current week as it closed the week gaining almost 3% and recovered from lows of 9725 seen on Monday. Positive global cues and a recovery in the BFSI space was the major reason behind the sharp pullback. Moreover, index heavyweight Reliance Industries has contributed significantly in the recent up move of the Nifty. Despite the ongoing India-China face off, the recovery in the market clearly indicates towards ongoing momentum in the index.

US markets also recovered from the sharp declines seen on the penultimate Friday and moved up almost 5% in the first couple of sessions of the week itself. Since then, the S&P has remained range bound resulting in a cool-down in volatility. India-VIX has also hovered around 33 levels before plunging towards 30 levels. We believe the settlement week may witness continued upsides if the Nifty sustains above 10100 levels.

Level of 20500 remains major support for Bank Nifty...

Volatility remained extremely high during the week as the Bank Nifty fell towards its sizeable Put base of 19500 and reverted sharply above 21000. The main trigger was seen post the Supreme Court decision to delay announcement on the moratorium case. Post this, broad based participation was seen where apart from SBI and Kotak Mahindra Bank, all banks performed well.

Throughout the week, additions were seen in OTM strike Puts. IVs remained elevated. We feel a decline towards 30 levels can be seen. This will benefit option writers.

Positional Future Recommendation

Long UltraTech Cement (ULTCEM) June future in the range of Rs. 3810-3830. Target: Rs. 4120; Stop Loss: Rs. 3670

Rationale

In the cement space, UltraTech Cement has shown significant resilience in the recent market volatility. While the Nifty has finally moved above its March 13 hurdle of 10200, we expect other index heavyweights to also follow suit. The same levels for UltraTech Cement lie around Rs. 3800. The stock had seen closure in open interest last week along with the up move suggesting ongoing short covering. The roll spread in the stock is almost flat while the broader market is trading at discount. As we are approaching settlement, the stock may find momentum along with the market and is likely to move higher on the expiry.

For details, click on the link below: https://www.icicidirect.com/mailimages/Derivatives_view.pdf

Shares of ULTRATECH CEMENT LTD. was last trading in BSE at Rs.3835.1 as compared to the previous close of Rs. 3844.15. The total number of shares traded during the day was 9266 in over 1418 trades.

The stock hit an intraday high of Rs. 3902.5 and intraday low of 3812.6. The net turnover during the day was Rs. 35725249.

Source : Equity Bulls

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