ICICI Direct - Derivatives Weekly View (March 5): Level of 14700 remains crucial for upsides to continue...

Level of 14700 remains crucial for upsides to continue...

Volatility continued to remain high in the Nifty as both side movements were seen. Dollar index moved to three months high and statement by Fed chairman did not go well with global equities, which saw selling. There was no exception for Indian equites that saw aggressive profit booking on the last day of the week and closed below 15000 levels.

After initial cool off in Volatility index VIX, it again gained momentum and moved towards 26 levels whereas the rupee depreciated almost 30 paise on Friday, which is likely to lead to negative sentiments prevailing as upsides could be limited and selling could be seen at higher levels.

Bank Nifty: Weakness may extend due to OTM Call writing...

The Bank Nifty ended almost flat for the week post its sell-off last week. The gains for the week were eroded last Friday as the Bank Nifty saw profit booking. Most private leaders felt the heat whereas PSU banks also gave up their gains last Friday, which kept the Bank Nifty under pressure and forced it to close below 35500.

As there could be downside risk to growth due to sharp surge in Covid-19 cases, negative sentiments prevailed on Dalal Street. The Bank Nifty reverted from 36600, after which fresh short OI blocks were visible, which is likely to trigger some more selling during the week.

Positional Future Recommendation

Short HDFC (HDFC) March future in range of Rs. 2570-2590; Target: Rs. 2435; Stop Loss: Rs. 2661

Rationale

As the Nifty corrected from the recent high of 15250, stocks from banking and financials tumbled sharply. HDFC Ltd, which saw a decent up move last month witnessed a round of profit booking. However, last week ATM strike of 2600 saw almost 1000 contracts additions, which is likely to keep the stock under pressure. Closure of Put writing positions to lower strikes is indicating more downsides. Among heavyweights, we feel HDFC could remain under pressure and further move lower.

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Source : Equity Bulls

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