Nifty 50 April series: 4 stocks where investors can park their money; do you own any?
- Indraprastha Gas Ltd, ICICI Prudential Life Insurance, Adani Ports, and Infosys are the top picks for the April series, according to Religare Broking. Here's why the brokerage sees the stocks outperforming this month.
Domestic equity benchmarks Sensex and Nifty 50 snapped the three-day gaining run earlier today, with the 30-share benchmark dropping by 110 points. The indices were dragged by profit-taking in select private bank and auto shares amid weak global cues and foreign fund outflows. The benchmarks had hit record highs on Monday, April 1, led by metals stocks on strong industrial data from the top consumer China, before settling at around 0.5 per cent higher.
The BSE Sensex declined by 110.64 points or 0.15 per cent to settle at 73,903.91. The broader NSE Nifty dipped 8.70 points or 0.04 per cent to 22,453.30. Recovery continued in broader markets as the domestically focused BSE smallcap gauge rose 1.28 per cent and the midcap index climbed 1.14 per cent.
Investors will closely monitor the Monetary Policy Committee (MPC) meeting by the Reserve Bank of India (RBI) starting April 3 for near-term cues, with the first outcome for the new fiscal 2024-25 (FY25) to be pronounced on Friday. According to State Bank of India (SBI) Research, the central bank may initiate a rate-cut cycle in the third quarter of financial year 2024-25.
In its derivatives monthly rollover report, domestic brokerage firm Religare Broking revealed that Nifty 50 closed at around 22,300 after volume-weighted average price (VWAP)-based buying activity was witnessed in the second half of the day.
In its report, Religare highlighted that at 96 per cent, textile and cement were the sectors where the highest rollover was witnessed in the March series. Whereas at 89 per cent, telecom and metals were the sectors where the lowest rollover was witnessed.
Nifty, Bank Nifty derivates summary
Nifty futures have rolled at around 70 per cent compared to 79 per cent, which is lesser with respect to the previous series. The Open Interest (OI) for the new contract is lower by around 18 lakh with respect to last month's contract, implying lesser short positions, according to Religare Broking.
Bank Nifty futures rolled at 87 per cent compared to 74 per cent, higher than the previous month. Bank Nifty futures have seen a huge addition of open interest of around 25 lakh with respect to the last month. This might be because of the more positions in Bank Nifty during the March expiry. Bank Nifty had traded in tandem with Nifty in March, and the brokerage believes that the index has the potential to outperform the benchmark in the April series.
Which stocks to invest in April series as per Religare Broking?
Indraprastha Gas Ltd (IGL), ICICI Prudential Life Insurance, Adani Ports, and Infosys are the top picks for the February series, according to Religare Broking.
IGL (CMP: ₹443.80)
Broadly consolidating, the stock did not do much in the March series with a gain of just a per cent but added substantial OI. With decent cash-based buying in the last three days of rollover activity, we believe these are likely longs. So one should be positive on this counter keeping 400 as a stop, according to Religare Broking.
ICICI Prudential Life Insurance Company Ltd (CMP: ₹623.90)
The stock gained over 14 per cent with a decline in OI implying short covering. With lesser positions in the stock, we anticipate a fresh inflow or addition of long positions in the stock. “The other technical parameters also pointing towards the same. So keeping a stop at 570, one should be positively biased,” said the brokerage.
Adani Ports (CMP: ₹1,403.80)
The stock gained marginally in the previous series but added substantial OI with higher rolls than the 3-M average. “With decent activity in last week of rollovers, we anticipate the stock to trade in the range of 1250-1450 with positive bias,” said Religare Broking.
Infosys (CMP: ₹1,483.20)
The stock lost more than 10 per cent with 53 per cent OI addition implying as shorts. Rollovers are in line with the 3-M average. However going forward, one should hold on for fresh shorting in the stock. “We believe stock might witness decent short covering in the days to come,” said the brokerage.
Outlook for April
Nifty Futures contract open interest started at around 122 lakh compared to 140 lakh in March. Bank Nifty futures have seen an Open Interest of around 50 lakh compared to 26 lakh in March.
The highest Nifty April monthly options open interest is at 21,000 PE and 23,000 CE. Nifty 23,000 call open interest stands at around 49,000 contracts and 21,000 put open interest at around 51,000 contracts.
“At expiry, VIX was at around 13 per cent levels implying 720 odd points swing in the Nifty 50 in next 30 days,” said Religare Broking.
The brokerage believes that auto, banking, and fast-moving consumer goods (FMCG) are the sectors that can outperform the index in the April series. Foreign institutional investors' (FIIs) long ratio is now at 45 per cent compared to 35 per cent previously in index futures implying lesser hedged positions into the April series. The IVs for options have declined marginally now at 14 per cent compared to 15 per cent implying a lesser swing in the April series.
Technical View: A combination of both long and short rolls was seen in the April series. For April futures, an average price of around 22,350 becomes a pivot for the month. Till the time Nifty trades above 21,900-22,000 on spot, the index is in a ‘buy on dips’ mode for the first weekly expiry.
"We expect the Nifty to find strong support at 21,900-22,000 levels for Apr series. On a spot basis, 21,900-22,600 might be the range for Nifty for the first fortnight of the April series,'' said Religare Broking.
For the April series, ratio wise (Bank Nifty/Nifty) has a resistance at 2.20 and support at 2.05. The ratio between Bank Nifty and Nifty is currently at around 2.11. ‘’The major support for Bank Nifty would be around 45,800 levels. We expect Bank Nifty to be in 46,000-48,500 levels for the first fortnight of the April series,'' said Religare Broking.
On the outlook for Nifty 50, Ajit Mishra, SVP - Technical Research, Religare Broking Ltd said, “We need participation from the heavyweights, especially banking majors to trigger the next leg of upmove in the index. Meanwhile, the buoyancy in the broader market is encouraging but traders should stay selective and maintain a “buy on dips’ approach.”
Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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