Indus Towers to AU Small Finance Bank - Jay Thakkar suggests 3 stocks to buy or sell for short-term in F&O segment

Stock market today: The domestic benchmark indices opened largely flat with a positive bias on Wednesday, tracking gains across global markets as easing crude oil prices offered some relief to investors. Sentiment improved after Iran resumed talks with Oman on measures to facilitate shipping through the strategically important Strait of Hormuz.

The Nifty 50 edged up 0.03% to 24,341.95, while the BSE Sensex was down 0.30% at 77,892.10 as of 9:15 IST.

At the opening bell, 13 of the 16 major sectors traded higher, although gains remained modest. The broader market also showed strength, with both small-cap and mid-cap indices rising around 0.2%.

Asian markets advanced after Brent crude fell 2.7% to $86.20 a barrel. Oil prices declined after Iran and Oman said they had discussed setting up a temporary joint navigation corridor through the Strait of Hormuz and agreed to remove mines from the key shipping route.

Meanwhile, despite continued geopolitical tensions, the US has started redeploying personnel to some diplomatic missions across the Middle East that had previously been evacuated or scaled back amid the conflict with Iran, Reuters reported, citing two people familiar with the matter.

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

Nifty 50

Nifty 50 has closed well in the positive territory on the day of the monthly settlement. Since the past 5 monthly settlements, this has been one of the best as it closed well above 24,000 levels; otherwise, the previous 4 settlements closed near 24,000 levels.

Now, including the August series settlement, the last 5 settlements have been within a range of +/-0.5%, and with that, the range for this period has been nearly -0.50% to 1.4%. There has been a contraction in the IVs as well over the past 53 trading sessions, so when put together, it appears that there is a higher chance of a breakout on either side. Historically, based on the last 15 years of data, post this kind of consolidation, there has been a minimum 2% move for 90% of the time, whereas 70% of the time there has been a move of 3%, so a move of 500 to 750 points from the last closing cannot be ruled out.

Since FIIs have turned net buyers in the equity cash segment over the last couple of months, and in anticipation of short covering in the Index and its heavyweights, we expect a breakout to the upside, which could take the Index to 24,800 to 25,000 levels. Throughout the entire August series, the 24,000 strike had the highest put base and served as a critical support. For the September series as well, the 24,000 strike will act as critical support, and until that level is held in the futures, the overall setup remains positive.

Stocks To Buy in the near-term - Jay Thakkar

Jay Thakkar of ICICI Securities recommends Indus Towers Futures, AU Small Finance Bank Futures, and Fortis Healthcare Futures.

Buy Indus Towers futures in the range of ₹385-388; stop loss below ₹375; Targets ₹400 and ₹410

Industower seems to have formed a short-term base, as price did not fall despite rising open interest, suggesting that shorts were added while the price action showed resilience in the near term. In the last trading session, the stock broke out of the range; hence, a bounce on account of further short covering can’t be ruled out. As per the options data, the put base is 380, the call base is 400, the range is 380-400, and since the stock is trading near the lower end of the range, the risk-to-reward is positive on the long side. The stock has also closed above its max pain level of 380, which will act as a short-term support.

Buy AU Small Finance Bank futures in the range of ₹1,120-1,135; stop loss below ₹1,095; Targets ₹1,165 and ₹1,185

AU Bank has been forming higher tops and higher bottoms with an increase in open interest, indicating that longs have been built up. It has again broken out of the sideways consolidation, indicating a fresh leg higher. According to the options data, there have been significant put additions at the 1,100 strike, which will now act asshort-term support. The stock is also trading well above its max pain level of 1100, which again becomes a critical support.

Buy Fortis Healthcare futures in the range of ₹920-930; stop loss below ₹900; Targets ₹965-985

The stock has been consolidating over the past few trading sessions after reversing from recent lows. The stock saw short-term additions during its previous decline, yet it reversed and formed a consolidating pattern. Going ahead a breakout is likely on account of short covering which can take the prices to 965-985 levels. Based on the options data, there is a large put base at 900, and as long as that level is held, the overall bias is positive. The stock has also closed above its max pain level of 910, which will also act as a short-term support.

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.