Nifty 50 August series: PNB to SBI Cards—4 stocks where investors can park their money; Do you own?

The domestic equity benchmarks Sensex and Nifty 50 snapped their five-day losing streak and logged their best session in seven weeks on Friday, July 26. The rebound was driven by heavy value-buying at lower levels and a recovery rally in blue chips such as Infosys, Bharti Airtel and Reliance Industries amid positive global cues.

The 30-share BSE Sensex jumped 1,292.92 points or 1.62 per cent to settle at 81,332.72. During the day, it soared 1,387.38 points or 1.73 per cent to 81,427.18. The NSE Nifty surged 428.75 points or 1.76 per cent to settle at an all-time closing high of 24,834.85. Nifty 50 hit a record high in the final minute of the trading session.

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In the broader market, the more domestically focussed BSE midcap gauge rose 2.12 per cent, and the smallcap index rallied one per cent. Investors' wealth soared ₹7.10 lakh crore following today's sharp rally. D-Street analysts said Tuesday's Union Budget 2024, which announced tax hikes on capital gains in equity investments and derivatives trading, also negatively impacted market sentiments.

Sensex and Nifty 50 recovered from post-budget losses and added 0.9 per cent and 1.24 per cent, respectively, for the week, posting the eighth week of gains — registering their best weekly winning streak in the last 14 years (since 2010).

In its derivatives monthly rollover report, domestic brokerage firm Religare Broking revealed that Nifty 50 closed above 24,400 after volume-weighted average price (VWAP)- based buying activity was witnessed throughout the session. Religare highlighted that at 97 per cent, the realty sector witnessed the highest rollover in the July series. Whereas at 86 per cent, the media sector witnessed the lowest rollover.

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Nifty, Bank Nifty derivates summary

Nifty futures has rolled at around 70 per cent compared to 72 per cent which is slightly higher with respect to the previous series. The Open Interest (OI) for the new contract is lower by around 14 lakhs with respect to the last month contract implying less long positions.

Bank Nifty futures have seen rollovers of 62 per cent however its expiry is still a week away. Bank Nifty futures have seen an addition of open interest of around five lakh with respect to the last month. This might be because of the higher short positions in Bank Nifty during the July expiry, according to Religare Broking.
 

Which stocks to invest in August series as per Religare Broking?

Mahanagar Gas Ltd, SBI Cards & Payments Services, SRF, and Punjab National Bank are the top picks for the August series, according to Religare Broking.

Mahanagar Gas Ltd or MGL (CMP : 1,770):

The stock gained over 16 per cent in price with OI addition of 67 per cent. Rollovers were at par with respect to the previous series at 87 per cent. ‘’On the technical front, the stock is also holding above its key MAs with some rise in volumes. Going Forward, we believe it may continue to do well and may heed towards 1,820-1,840 in the near term,'' said Religare Broking.

SBI Cards and Payment Services Ltd (CMP: ₹721)

The stock lost marginally in the July series but added substantial OI to the tune of 35 per cent. ‘’Rollovers were also higher at 98 per cent compared to previously. With stock showing signs of accumulation, we believe it may see good traction in the August series. One should be positively biased keeping a stop at 685,'' said the brokerage.

Punjab National Bank (CMP: ₹117.5)

The stock ended the series being flattish with significant OI addition. With rolls at 96 per cent which picked up from 65 per cent previously, the stock may see reversal. ‘’With supports at 112-113, we believe the stock may do well and test 130 in the August series,'' said Religare Broking.
 

SRF(CMP : ₹2,405):

The stock did nothing but added 25 per cent in its OI. ‘’With decent cash-based accumulation in the last three days of the series. We believe the stock may see fireworks in August. One should be aligned with that, keeping a stop at 2,280,'' said the brokerage.
 

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Outlook for July

Nifty Futures contract OI started with around 138 lakh compared to 151 lakh in July. Bank Nifty futures have seen an OI of around 32 lakh compared to 27 lakh in July. The highest Nifty August monthly options OI is at 24,500 PE and 24,500 CE. Nifty 24,500 call OI stands at around 11,4000 contracts and 24,500 Put OI at around 13M8000 contracts.

‘’At expiry, VIX was at around 13 per cent levels implying 800 odd points swing in the Nifty 50 in next 30 days,'' said Religare Broking. The brokerage believes that fast-moving consumer goods (FMCG) and pharma are the sectors that can outperform the index in the August series.

Foreign institutional investors (FIIs) long ratio is now at 57 per cent compared to 82 per cent previously in index futures, implying more hedged positions into the August series. The IVs for options have remained at around the same levels at 14 per cent compared to 14 per cent, implying more or less the same swing in the August series.
 

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Technical View:

The majority of the rolls which happened to the August series was on the Short side. For August futures with an average price of around 24,500 which becomes a pivot for the month. Until Nifty trades above 24,200-24,250 on spot, the index is in a BUY ON DIPS mode for the first weekly expiry. 

‘’We expect the Nifty to find strong resistance around 24,800-24,900 levels for August series. On spot basis 24,100-24,800 might be the range for Nifty for first fortnight of August series,'' said Religare Broking.

‘’Bank Nifty had underperformed against the benchmark in the July series. Going forward, we believe this might not continue. For this series, ratio-wise (Bank Nifty/Nifty) has a resistance at 2.16 and support at 2.08. The ratio between Bank Nifty and Nifty is currently at around 2.09,'' said the brokerage.

‘’The major support for Bank Nifty would be around 50,300 levels. We expect Bank Nifty to be in 50,300-52,000 levels for the first fortnight of the August series,'' it added.

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On the outlook for Nifty 50, Ajit Mishra – SVP, Research, Religare Broking Ltd said, ‘’Today, the market experienced a significant rally, gaining nearly two per cent and reversing the recent negativity. The upbeat tone was evident from the start, with substantial buying in heavyweights across various sectors further driving the momentum.''

‘’Consequently, the Nifty and Sensex closed near their highs at 24,834 and 81,332, respectively. This surge was fueled by improved sentiment following robust performances in IT and Metal stocks, and significant rollovers to the August series. Broader indices also reflected this strength, showing substantial gains,'' said Mishra.

‘’The current trend suggests that bulls are in control, and we are likely to see further advances in the coming sessions. However, it is advised to remain selective, focusing on index majors and large midcaps,'' he added.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, and not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.