Derivatives Weekly View (July 16): Crucial support at 15800 for positive bias to continue - ICICI Direct

Crucial support at 15800 for positive bias to continue...

The Nifty was finally able to move above 15900 after six weeks of consolidation with the help of technology stocks. Most index heavyweights, particularly top 10 Nifty stocks, stayed range bound and are finding it tough to surpass their highest Call bases. However, stocks like HCL Tech, Tech Mahindra, Wipro, L&T saw a sharp move last week that helped the Nifty to move above 15900.

On the options front, unlike the last couple of weeks, the options activity is relatively low. Considering recent Put writing and Nifty move above 15900, we can expect some positive bias in the Nifty towards 16200. Thus, long positons can be formed only till the Nifty sustains above 15800, which is the major Put base. A move below 15800 may keep the ongoing range bound movement intact.

Bank Nifty: Close above 36000 should trigger aggressive short covering...

The Nifty managed to close at a new life-time high whereas the Bank Nifty finally moved above its trading range and moved to a new five-month high. The Bank Nifty has approached its highest Call base of 36000. A close above this level should open more upsides in coming days.

Traders remain cautious to take over leveraged position before the quarterly numbers of HDFC Bank, which is lined up on weekend. However, looking at the overall set up in most private banks, we feel downside should be limited.

Positional Future Recommendation

Voltas

Rationale

Consumer discretionary stocks remained in focus last week where Havell's rose almost 5% on Friday. With the rise in DA allowances by the central government, we feel this sector would remain in focus. Voltas being the leader has relatively consolidated above its Put base of 1000. However, last week it found momentum and closed at a weekly high along with closure in OI indicating short covering. Last quarter as well, similar activity was observed ahead of results when the stock moved higher on the back of short covering.

For details, click on the link below: Link to the report

Source : Equity Bulls

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