FUTURES & OPTIONS

Mirroring the course of the cash market, derivative segment saw spurt in volumes during the later part of the week ended. The pullback was mainly due to short covering, as most of the exit polls predicted a BJP victory in the state elections. Sharp recovery in Bank Nifty from lower levels accompanied by buying in pharma, auto and metal sector was seen.

Highest OI for Nifty is placed at 10,500- strike call option and 10,000- strike put option, while for Bank Nifty the highest OI is placed at 26,000- strike call option and 25,000- strike put option.

After a long time, select pharma stocks witnessed good buying interest. Dr Reddy’s logged gains of over 8 per cent and Lupin was up by 5 per cent.

Market circles indicate a strong rally in the sector. Stay invested and add strong momentum counters like DRL, Divi Labs and Granules on declines.

The Supreme Court order on allowing usage of petcoke in the manufacture of cement gave fillip to cement stocks.

Buy ACC and Ultratech for unexpected gains.

Renewed buying interest was also seen in the metal space after encouraging data from China. China's industrial output expanded at faster than expected pace in November as growth in top industrial metals consumer remains resilient.

Stay invested for further gains in Vedanta, Hindalco, Tata Steel and JSW Steel.

The Centre is likely to seek a nod from Parliament for the recap next week and it may also provide additional recap of ` 10,000 crore through a second supplementary.

Sources indicate decision on SLR status for the recap bonds. Stay overweight in the banking space.