ICICI Direct - Derivatives Weekly View (April 30): Sustainability above 14500 crucial for ongoing recovery...

Broader markets witnessed a strong recovery in the settlement week and moved towards 15000 before closing the week just above 14600. Continued buoyancy in metals and short covering move in the banking space led the recent market recovery while the rest of the sectors remained largely subdued. While the Nifty gained almost 2% in the week, the banking index moved up almost 3%. On the other hand, midcaps and small cap stocks found momentum and closed the month near recent highs.

On the rollover front, the Nifty started the new series with almost 9 million shares, which is marginally higher than the last series. However, Bank Nifty OI has declined significantly compared to the last series while the roll spread has declined across the board. We believe after significant volatility in the April series, we may be heading for some consolidation before fresh directional move.

Bank Nifty: Index likely to consolidate for week...

Broader markets witnessed volatile trade in the April series where for the major part the Bank Nifty underperformed but as sectoral rotation was seen, it attracted money inflow and managed to end the April series well above 32500.

The Bank Nifty started the May series with 1.3 million shares, significantly lower than the last series OI of almost 2.1 million shares. The roll spread in the banking index has also declined sharply to near 100 points as some cool-off was experienced during the settlement trade.

Positional Future Recommendation

Short Tech Mahindra (TECMAH) May future in range of Rs. 970-975; Target: Rs. 905; Stop Loss: Rs. 1015.5

Rationale

Most IT stocks witnessed profit booking post their quarterly numbers with sectoral rotation clearly visible where inflows shifted to BFSI. Tech Mahindra was no exception. It continued to witness profit booking from Rs. 1050 levels. The OI in the stock declined sharply from mid-April whereas for the May series OI remains relatively lower. We feel the current leg of long liquidation should continue in most IT stocks. The stock may slip with a strengthening rupee triggering some negative sentiments.

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

Source : Equity Bulls

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