Market Outlook - F&O - ICICI Direct

Raj Deepak Singh, Head - Derivatives, ICICI Securities

Derivatives Weekly View (November 6): Positive bias to be maintained as long as 11950 is held

Positive bias to be maintained as long as 11950 is held

After witnessing extreme volatility in the October series, November series started with a sharp up move as the Nifty moved towards 12200 amid ongoing uncertainties prevailing to US elections. With broader market participation, the Nifty gained almost 5% last week while midcap and small cap indices also witnessed a significant recovery. Going ahead, we expect the current momentum to continue in the market.

From the options space, the Nifty was able to surpass its highest Call base of 12000 strike. Now the same levels should act as major and important support for the index. Hence, positive bias in the Nifty should be maintained if the Nifty is able to sustain above these levels. In the last couple of sessions, significant Put writing was seen in ATM Put strikes of 12000 suggesting expectations of limited downsides in the short-term. On the higher side, the highest Call base of 12500 seems to be an immediate target for the index.

Bank Nifty: Put writers likely to push index towards 27500...

The Bank Nifty outperformed the current leg of the Nifty by a huge margin and managed to end above 26500. Leaders among the pack did well whereas stock from the PSU universe also performed well. SBI post its quarterly numbers moved above its Call base of 200.

The Bank Nifty rallied almost 2700 points last week, which is one of the best weeks since September 2019. The open interest in the stock rose almost 18% along with price rise indicating the rally was supported by fresh long accumulation.

Positional Future Recommendation

Long Infosys (INFTEC) November future in the range of Rs. 1097-1103. Target: Rs. 1187; Stop Loss: Rs. 1045.50

Rationale

After a decent rally in the technology space, a leg of profit booking was seen in most of them post their quarterly numbers. However, on the back of buyback news in TCS and Wipro, relatively outperformed and no major price correction was seen. Stocks like Infosys saw fresh long OI blocks in the November series. The stock managed to move and sustain above 1100 levels. As the series progressed Call writers shifted their position to OTM strike of 1200 whereas sizeable Put OI is placed at 1100, which should be considered as a re-entry opportunity to create long. We feel the current leg of long accumulation in the stock would continue and the stock is well placed to move towards its new life-time high.

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Source : Equity Bulls

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