FUTURES & OPTIONS

The settlement week witnessed sharp bouts of volatility in the derivative segment.

September F&O expiry started with a bang as Nifty and Bank Nifty saw an addition of long positions in the future contracts despite of witnessing weak rollovers.

On the options front Nifty 10,000 Call option & 10,100 Call option saw active open interest addition; while on put side Nifty 9,700 Put option and 9,800 Put option were active.

Sentiment indicators like implied volatility, open interest, put/call ratio and VIX suggest further gains from current levels. Decisive move above 10K level could open up the next upside target of around 10,200 levels for Nifty, which could be achieved in the next 1-2 weeks.

True to predictions, Pharma stocks saw renewed buying interest. Dr Reddy’s was the top gainer after the company entered into a settlement agreement with a US drug maker to resolve a patent litigation. Stay invested for further gains.

Despite better than expected sales numbers Auto stocks may witness profit booking at higher levels on the back of the Cabinet approval for an ordinance that will allow the cess levied on luxury cars, SUVs etc to be raised to as much as 25 per cent.

Observers say that metal prices are showing a tremendous up move and expect the same to continue for much longer time than expected. Cycle is changing after 8 to 9 years, metal stocks shall continue to outperform many other sectors in the coming 6 to 12 months. Stay overweight in the sector.

Stocks looking good are Aurobindo Pharma, GSPL, Havells, HUL, Hero Motocorp, IDFC, IB Real, Mannapuram Finance, NMDC, Ujjivan, Pidilite Inds and YES Bank.