NTPC, PFC: 5 F&O stocks see long OI build-up; Here's how to trade in them

Build-up of long OI in general indicates that traders are expecting the price of the underlying stock or index to gain in the near-term.

Even as the markets dwindled under selling pressure in the last two trading sessions last week, select stocks continued to witness significant build-up in open interest (OI) on the long (Buy) side, data suggests.

Build-up of OI on the long side in general indicates that traders are expecting the price of the underlying stock or index to gain in the near-term.

Cipla, NTPC, PFC, PowerGrid Corporation and REC were the five stocks to have witnessed a price gain backed by rise in OI in the last four trading sessions. This implies a likely build-up of long positions at these counters.

NTPC in particular has logged steady gains in the last four trading sessions, and was up 4.2 per cent along with a 15.5 per cent rise in OI. PFC dipped marginally in the last two trading sessions, but still holds a net gain of 7.2 per cent in the last four trading sessions backed by a 14.6 per cent jump in OI.

REC has seen the highest build-up in OI, up 21.5 per cent since March 03, 2023. The stock did decline 2.8 per cent on Friday, but was up 3.4 per cent in the last four days.

PowerGrid Corporation and Cipla too have recorded marginal gains of 1.9 per cent and 0.1 per cent in the last four days, while the OI have risen significantly by 16.7 per cent and 15.7 per cent.

Going ahead, these are the key levels to be watched out on the stocks
 

NTPC

Target: Rs 187

Support: Rs 178

Along with the OI build-up in the March futures contract, NTPC has also witnessed significant addition in OI at Rs 180 and Rs 185 Strike Prices. The overall PCR (Put Call Ratio) at 0.45 also substantiates the bullish sentiment at the counter. 

Technically, the stock closed above the higher-end of the Bollinger Bands on the weekly chart. This indicates, that the near-term bias is likely to remain bullish as long as the stock sustains above Rs 178. On the upside, the stock could rally to Rs 187-odd levels.

However, in case, the stock trades consistently below Rs 178. It could slip to Rs 175, wherein the highest OI is seen in both Calls and Puts.

PFC

Target: Rs 174

Support: Rs 160

Resistance: Rs 170

Even as the OI decline a wee bit in the last two trading sessions, the overall long OI build-up stands at a healthy 14.6 per cent for the stock. Technically, the stock has surged over 19 per cent in the last seven trading sessions. Hence, some profit-taking at higher levels can be expected.

The stock is likely to face near-term resistance around Rs 170. On the downside, the stock price can correct to Rs 160, with an outside chance of a dip towards Rs 153, wherein the stronger support lies. On the upside, the stock could spurt to Rs 174.

The stock is not much active in the options segment, with notable OI seen at Rs 170 Call and 165 Put.

RECL

Target: Rs 125

Support: Rs 119.30; Rs 117

From its lows of Rs 110.75 on February 27, the stock surged over 16 per cent to hit a high of Rs 128.45 on March 09. Post that the stock is witnessing some consolidation. The strong build in OI is likely to lend support to the stock in the near term.

The daily charts indicate that the stock could seek support around the 20-DMA at Rs 119.30 level, below which the next significant supports are placed at Rs 117 and Rs 116.50 odd levels.

On the upside, the stock could look to revisit Rs 125 level soon. This is a critical resistance level on the monthly chart.

PowerGrid Corporation

Target: Rs 240

Support: Rs 220

The stock is seen trending along its higher-end of the Bollinger Bands, both, on the daily and the weekly charts near about Rs 229-odd level. As per the monthly chart, the stock has bounced back after testing support at its 20-MMA (Monthly Moving Average) placed at Rs 213.30.

The overall bias for the stock is likely to remain positive as long as the stock sustains above Rs 213. On the upside, the stock can gradually move towards Rs 240 level, while support can be expected around Rs 220 level.

In the very near term, sustenance above Rs 229-odd level is the key for further gains. The highest OI in Calls is at Rs 230 Strike Price.

Cipla

Target: Rs 920

Support: Rs 870

Resistance: Rs 885

This stock has seen the minimal gain among the five so far, even as the OI witnessed significant build-up. One of the reasons for this was the lower interest at the counter owing to the steep fall in February.

The stock is now seen attempting to pullback from oversold zone. Among the momentum oscillators, the Slow Stochastic is in favour of the bulls, while the MACD too may turn favourable soon.

In case of a downside, the stock is likely to find considerable support around the recent low of Rs 870-odd level. On the upside, the stock needs to sustain above Rs 885, for a rally towards Rs 920 level.