F&O Strategy: Sell DLF, LTIMindtree Aug futures, recommends Rupak De amid stock market crash

Stock market today: The domestic benchmark indices, the Sensex and Nifty 50, fell almost 2% on Monday—the largest intraday decline in the last two months—but performed somewhat better than their Asian counterparts during a sell-off in global shares due to concerns about a slowdown in US economic growth.

At 10:57 IST, the Sensex fell 2.53% to 78,940.55, while the Nifty 50 index down 2.42% to 24,120.15.

July's US employment growth slowed more than anticipated, according to figures released on Friday. The US non-farm payrolls fell considerably short of forecasts, the data from the prior month were revised downward, and—most importantly—the unemployment rate rose to almost a three-year high.

The rupee hit a record low and bond rates plummeted to their lowest levels in two years, despite the fact that Indian equities performed comparatively better.

The realty index saw the biggest decline, at 5%, out of the thirteen major stock sub-indices. Each of the mid-cap and small-cap indices had a decline of more than 2%.

“Nifty 50 weekly contract has highest open interest (OI) at 26,000 for Calls and 24000 for Puts while monthly contracts have highest open interest at 25,000 for Calls and 24000 for Puts. Highest new OI addition was seen at 24,800 for Calls and 24,100 for Puts in weekly and at 24,400 for Calls and 24100 for Puts in monthly contracts. FIIs decreased their future index long position holdings by 0.43%, increased future index shorts by 11.52% and in index options by 69.61% increase in Call longs, 49.02% increase in Call short, 60.21% increase in Put longs and 21.50% increase in Put shorts,” highlighted Anand James, Chief Market Strategist, Geojit Financial Services.

Technical views by Rupak De, Senior Technical Analyst, LKP Securities on F&O market

Bank Nifty

For Bank Nifty the last expiry date was Wednesday, July 31. Bank Nifty has spent the whole day below 21EMA suggesting an ongoing weak trend. However, unlike the Nifty 50 the closing was not all bad, as strong buying in HDFC Bank Ltd has led to closing of 250 points off the low. Now, the support is placed at 51,000 and fresh selling is expected only below 51,000. On the higher end, 51,500 is likely act as an immediate resistance. A decisive move above 51,500 might induce further rally in the index.

Open Interest Analysis: Significant additions were seen in the open interest at the 51,200 PUT and 51,000 PUT, while CALL writers added substantial positions at the 51,500, 51,400 and 51,400 strikes on Friday. Maximum CALL open interest was seen at the 52,000 strike, whereas maximum PUT open interest was seen at 50,500, indicating a broader range for the market. Currently the CALL writers are slightly out numbering the PUT writers for current weekly expiry.

Nifty 50

For Nifty 50 the last expiry date was Thursday, August 1. Nifty 50 has declined sharply due to a global sell-off. Technically, it has moved lower after forming a spinning top on the daily chart; suggesting a rise of bearish bet. The RSI has entered a bearish, with a negative divergence in force. The weakness that has just began might remain few more days or until it moves back above 24,800. The market seems to favour “sell on rise”; strategies while it stays below 24,800. On the downside, Nifty 50 could potentially move towards 24,530/24,400.

Open Interest: CALL writers added substantial positions at the 24,800, 24,700 strikes on the first day of the current expiry, whereas no significant PUT writing was visible. Maximum CALL open interest was seen at the 25,000 strike, whereas maximum PUT open interest was seen at 24,500, indicating a broader range for the market. CALL writers remained highly active in weekly expiry as compared to PUT writers.

Technical stock recommendations for the week

Sell DLF August Futures around 850; Target Price of ₹835/820; Stop Loss of ₹866

The stock price slipped after encountering resistance at the previous swing high. Recent selling has caused the price to fall below the critical 21-day EMA. Additionally, the RSI has entered a bearish crossover. Short-term weakness may persist as long as the stock remains below ₹850. A short position can be considered with a downside target of ₹805. Resistance on the upside is at ₹860.

Sell LTIMindtree August Futures around ₹5,600; Target Price of ₹5,300; Stop Loss of ₹5,700

The stock price slipped from the wedge pattern on the daily chart, suggesting rise in bearishness. Recent selling has caused the price to fall below the critical 21-day EMA. Additionally, the RSI is in a bearish crossover. Short-term weakness may persist as long as the stock remains below 5,700. A short position can be considered with a downside target of 5,300. Resistance on the upside is at 5,700.

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