Bajaj Auto to Info Edge - Jay Thakkar suggests 3 stocks to buy or sell for short-term in F&O segment

Indian benchmark equity indices, the Sensex and Nifty 50, are likely to open on a muted note on Wednesday, 2 September, amid elevated crude oil prices and cautious global cues.

The Gift Nifty also indicated a subdued start for the domestic market. The index was trading around 24,031, down 60 points from the previous close of Nifty futures, signalling a weak opening for Indian equities.

Domestic equities ended lower in the previous trading session, with the Nifty 50 closing below the 24,100 mark.

The BSE Sensex slipped 12.99 points, or 0.02%, to settle at 76,944.28, while the Nifty 50 declined 24.60 points, or 0.10%, to close at 24,055.80.

Market Outlook by Jay Thakkar, Vice President & Head of Derivatives and Quant Research, ICICI Securities

Nifty 50

Nifty 50 closed above 24,000 on the weekly expiry; however, it traded below 24,000 for most of the session, near 23,950. Post the auction session, it closed at 24,055 levels, resulting in a futures premium of just 25 points now.

Similarly, ahead of the auction, the price was near 57,270, and post-auction it closed at 57,409, due to which the futures premium is now just 150 points approx. The global cues remain weak, and as a result, international crude oil prices are back above $90, a concern in the near term. The impact on bond yields worldwide is negative, indicating a possibility of a rate hike; hence, global equities are trading with a risk-off bias as of now.

Since the last two trading sessions, the India VIX has been closing in positive territory, and it is now at 11.31, up from 10.55 a couple of days back. If Nifty continues to trade below the 24,000 level, which has the largest put base for the September series on a cumulative basis, then the next support is at 23,500. As a result, there is a risk of a rise in India VIX, which could jump back to 14-15 levels. Hence, it is recommended to be on the short side below 23,950 levels, whereas above 24,200, one can initiate longs. Likewise, the BankNifty has been trading within a range of 56,500-58,500. If it breaks to the upside, one can create long positions; if it breaks to the downside, one can create short positions. Till that happens, it can trade sideways within this range.

Stocks To Buy in the near-term - Jay Thakkar

Jay Thakkar of ICICI Securities recommends Bajaj Auto Futures, Info Edge Futures, and Aurobindo Pharma Futures.

Buy Bajaj Auto Futures in the range of ₹12,300-12,400; stop loss below ₹11,500; Targets at ₹13,500-14,000

Bajaj Auto has been forming higher highs and higher lows, and with that, there has been a long build-up seen in the futures segment as well, indicating that the short-term trend is positive for the stock. As per the options data, there have been significant put additions at the lower levels from the 12,000-11,500 strike levels, whereas the 12,500 strike has the highest call base, above which a further uptrend is expected. The PCR is at 1, which, for a stock option, is quite positive. The max pain level is 12,100, and the stock is trading well above that.

Buy Aurobindo Pharma Futures in the range of ₹1,650-1,700; stop loss below ₹1,600; Targets at ₹1,800 – 1,870

Aurobindo Pharma has also been trending higher, forming new highs and lows, and now the leverage is quite low; hence, there is a lower probability of long unwinding. Based on the options data, there is no major put writing; however, the 1,600 strike, which has the largest call base, may unwind as the stock trades significantly above 1,600. The max pain is also at 1,600 levels, and that will act as a critical support, hence the stop loss is recommended below 1,600 levels. The stock is trading at its lifetime highs, and based on current sectoral and stock momentum, it is likely to remain in an uptrend until the 1,600 level is broken.

Buy Info Edge (Naukri) Futures in the range of ₹1,350-1,370; stop loss below ₹1,320; Targets ₹1,450-1,500

The stock has been consolidating within a range of ₹1,320-1,400 for the past few trading sessions, and the options data indicates put additions at the 1,300-1,360 strikes, as well as call unwinding at the 1,360 strike, suggesting that 1,360 is a critical level around which it has closed in the last trading session. The max pain is at 1,340; hence, that level will also act as short-term support. Recent up move has witnessed significant short unwinding, due to which going ahead it is likely to test the minimum 1450 levels, which is the upper end of the broader range.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.