Derivatives Weekly View - March 17, 2022 - ICICI Direct

Nifty

The Nifty has moved up sharply this week outperforming most global indices with almost 4% gains. While FIIs' selling has dried up ahead of FOMC policy, short covering move among heavyweights has propelled the up move. However, the midcap and small cap space has relatively underperformed last week. We believe, after such a sharp relief rally, the index may spend some time and consolidate above 17000 in the coming week while stock specific momentum may continue.

Due to a sharp up move, Call bases have got distorted significantly in the last couple of sessions. However, considering the highest Put base of 17000 where continued addition is visible, we believe the Nifty should find support around these levels and one can utilise any decline towards17000 to create fresh longs. On the higher side, while immediate resistance may be experienced around 17500, the major hurdle for the Nifty remains near 17800.

Bank Nifty

A positive development on the geopolitical front and US Fed decision to hike interest rates by only 25 bps has relieved the investor community across the globe. The Nifty as well as Bank Nifty ended the week near their highest level since February 22. As the Nifty managed to close above its sizeable Call base of 17200, the Bank Nifty has relatively underperformed and failed to close above its sizeable Call base of 36500.

Among banking heavyweights, apart from HDFC Bank, most stocks participated in the current rally where Axis Bank outperformed on the back of closure in Call writing positions. Among the PSU pack, SBI has managed to close marginally above its sizeable Call base of 500, which is a positive sign.

Positional Future Recommendation

Adani Ports

Rationale

As the Nifty reverted sharply and closed above 17200, most heavyweights participated and witnessed positive momentum. Stock like Adani Port have shown resilience in the current sell-off and largely remained in a range. In the current leg of consolidation, marginal pick-up in delivery volumes were seen. The stock OI remains at elevated levels but last week it managed to close marginally above its highest Call base, which is a positive sign. On the back of short covering, we feel the stock should head towards Rs. 800 levels.

L&T Infotech

Rationale

The technology space remained in focus and has provided a cushion to the index in current sell-off. However, as the index reverted higher and sectoral rotation took place, money flow was seen from IT to other sectors. Most IT stocks are exhibiting sign of profit taking. On the midcap side, L&T Info is attracting Call writing in little OTM strike, which is likely to limit upsides. The OI remains at elevated levels. Once profit booking gets triggered, the stock should head towards Rs. 5800 levels.

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Link to the report

Source : Equity Bulls

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