Derivatives Weekly View (July 17): Nifty to target 11200 with support at 10750... - ICICI Securities
The Nifty has consolidated with a positive bias during the week and been able to recover from lower levels of 10550 on fresh additions. The index is likely to test 11000, 11200 levels in coming weeks with support seen at 10750. The highest Call base is almost equally placed at 11000 and 11200 strikes. Thus, a move above 11000 would lead to another leg of short covering towards 11200.
Banking heavyweights have remained quite underperformers and a leg of short covering is expected in these stocks. This is expected to keep indices at higher levels.
Bank Nifty: Level of 21000 remains strong support for week...
The Bank Nifty relatively underperformed in this current leg of the Nifty from 10200 to 10900 whereas stock specific activity continued in banking stocks. Most private banks have the highest Call base at ATM strikes, which kept the Bank Nifty move in check. HDFC Bank result is lined up this weekend, which will trigger some volatility in the index. However, we feel a close above 1100 in HDFC Bank again would trigger short covering.
An almost 1000 points rally was seen in the Bank Nifty in the last two days of the week where PSU banks along with private participated. NBFCs also saw short covering, which will keep BFSI overall sentiment positive.
Positional Future Recommendation
Long Bajaj Auto (BAAUT) July future in the range of Rs. 2960-2980. Target: Rs. 3210; Stop Loss: Rs. 2840
Bajaj Auto has outperformed the rest of the auto stocks and exhibited significant resilience in market volatility. It has scaled back to its February highs from where the market had started declining. From an F&O point of view, the open interest is still low. We expect the ongoing outperformance to trigger fresh longs in it, which should take the stock higher. It has closed near its major Call base of 3000 strike where closure of positions is evident. Hence, further upsides towards its highest Call base of Rs. 3200 due to continued covering cannot be ruled out.