Market Outlook - F&O - Sep 11, 2020 - Raj Deepak Singh, Head - F&O, ICICI direct
Derivatives Weekly View (September 11): Sustainability of 11500 to push Nifty towards short covering...
The Nifty remained under pressure throughout the week. Despite a flat opening, it declined below its major Put base of 11300. However, it recovered primarily with the help of Reliance Industries and closed the week with almost 1% gain at 11464. The recent declines in the market were in line with profit taking in global markets. Both midcap and small cap indices closed the week negative. Moreover, escalation of border tensions between India and China may worsen sentiments further.
Sectorally, major participation was seen in technology and RIL whereas profit taking was seen in metal and banking stocks. Due to weak global sentiments, FIIs turned net sellers for the week and sold almost Rs. 2900 crore during the week. However, the rupee appreciation trend is also going to be supportive.
Bank Nifty likely to consolidate in coming days...
The Bank Nifty continued to remain under pressure for a second week as it slipped below its important support of 23000. Most PSU bank stocks are in the F&O ban whereas OTM Call writing was seen in private banks.
During the week, an almost 25% jump was seen in OI along with a fall in price indicating formation of short positions. However, despite sell off there was no closure in OTM Puts of 22000 and 21500, which is a positive sign. We feel those writing positions would continue to provide support in case of further profit booking.
Positional Future Recommendation
Long Max Financials (MAXFIN) September future in the range of Rs. 588-592. Target: Rs. 635; Stop Loss: Rs. 565
For the major part of the week, BFSI stocks remained under pressure due to continuous profit booking. However, stocks like Max Financials remained largely resilient and witnessed buying on every decline. The stock continued to consolidate near its February 2020 high with a lower OI base. The recent high delivery seen in the stock should limit downsides in the near term. We expect open interest to increase gradually for the September series. The stock is likely to surpass its major Call base of Rs. 600 and move towards Rs. 635 in the days to come.