F&O cues: Long only money entering into IT stocks

Software makers gained significanly in the past few weeks on back of rupee weakness that fell to an all time low of 70 per USD earlier.

Indian IT companies export a chunk of their product to overseas clients such as US and Europe and any fall in rupee add to their profit margins.

So is there more upside left in the IT space or is the best already over?

Check out the trading strategies with Shshank Mehta, Derivatives Strategist, Shah Investor's Home.

Smartinvestor : Markets have been extremely volatile this week. What are the key levels to be watched out for on the Nifty?

Shshank Mehta : We are observering 5975 in Nifty Futures on the upside as the key resistance level. A decisive close above this level will catapult Nifty to an all-time high. However, till this level is not breached we advise caution in markets and suugest traders to BUY ITM (in-the-money) Put Options in Nifty and not to create short positions in Nifty Futures. Correspoding level in Bank Nifty Futures is 10500; a decisive close above this level can stretch the Bank Nifty Futures to 11600 levels.

Smartinvestor : So you foresee a decent upside on the Bank Nifty ahead of the credit policy? What is the call on individual banking stocks?

Shshank Mehta : We are bullish on the Banking Pack with focus on AXISBANK, ICICIBANK and SBIN. We, however, we suggest traders to BUY Call Options in these counters only if Bank Nifty Futures gives a decisve close above 10500. We also advise traders avoid other banking counters such as PNB, BANKBARODA, YESBANK, and other counters that have been sharply volatile in recent times.

Smartinvestor : Are you seeing a lot of long only money entering into the Indian markets?

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