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  • Chandan Taparia - Derivative Analyst, Anand Rathi

    Chandan Taparia

    Derivative Analyst, Anand Rathi

    DATE: September 23, 2015, 12:00 PM

    SUBJECT: F&O watch: How will the markets play out in October?




    Hello and welcome to the web chat with Chandan Taparia, Derivative Analyst, Anand Rathi on 'F&O watch: How will the markets play out in October?'

  • S


    What is the broad market trend post the expiry of September F&O contracts?


    Long term trend is still positive but short term trend is under the pressure as index corrected from 9191 to 7540 mark in last seven months with short built up and negative flows from FIIs. But as per the recent price behavior now we are getting an early sign of bottoming out of the market as it tested 7550 zones but the short term trend would require index to cross and hold above 8000 zones to revisit 8181 and 8330 levels in next coming series. Market rally started by crossing high of 7562 made on 16th May 2014 (Election result of NDA govt). It tested the previous resistance and moved higher which a classical example of a bull market and a hope for bulls to start the next leg of rally.

  • A


    Post the uncertainty in the markets,should we expect a bounce back in the October series or will the volatility still prevail?


    In the last series India VIX moved to a 15 series high of 35.57 levels and that created a panic in the market in line with the weak structure from Global indices. Volatility and market has usually a negative co relation so if volatility cools down then bulls will get comfort zones and in that condition index may head towards 8181 kind of zones in next series. We are expecting volatility to remain comparatively higher till RBI meet and post the event VIX can go down toward 17-18 zones. But volatile swing may continue till we don't get relief from weak Global market and depreciating Indian Rupees.

  • S


    What strategy can one deploy for Sun Pharma?


    Sunpharma has been consolidating in a range from last three series and holding the multiple support at around 800 zones. Overall longs are intact in the counter and one can hold till it respect to its major support zones. Overall trend is positive and after the recent consolidation it may see fresh buying interest which may take it to 950+ levels. One can go for bull call spread by buying 900 call and selling 940 call for October series as it is near to multiple hurdle levels and this strategy would provide profit for an up move till 940 zones with limited risk. Other pharma stocks like Lupin and Glenmark are also trading at an attractive levels.

  • R


    FIIs have remained sellers in the last couple of sessions and markets seems to be facing liquidity cruch as follow up buying is missing. Do you see Indian market losing momentum going forward?


    Yes, that's right, FIIs are selling from last couple of months. In the month of August they were net sellers of around 18000 Cr. and they are still turning to net sellers in September month by around 6000 Cr. in cash segment. But overall market is taking base and consolidating as DIIs are continuously supporting the market. FIIs flow is missing from last many weeks and that is the reason that market is finding pressure at every bounce back move but as we believe that India is an attractive place to get better return so once the FIIs flows come back to the market we may see a potential move by heading towards new life time high zones.

  • G


    Which are the sectors that one can focus for gains in October F&O Series?


    Market is likely to see buying interest in selective stocks rather than buying in broader sectors. Its a perfect time to pick the stock for trading as well as investment point of view. We may see buying in selective Auto stocks like Ashokley, Tvsmotors, Maruti. In textile we have positive view on Arvind ltd while selective Housing Finance and beaten down PSU stocks may see buying interest coming back in next series. One can also look at selective Capital Goods stocks like LT and Siemens.

  • V


    What is your strategy for Bank Nifty for the October series?


    Bank Nifty has potential to outperform the broader market. Recently it made a bottom near to 15800 zones and rallied towards 17650 levels. It has immediate support near to 16800 then 16400 zones while holding above 17250 may take it to 17660 then even 18000 zones. We will suggest to use the buy on decline strategy in Bank Nifty till it manages to hold above 16800 zones. It will be better if some one goes for bull call spread by buying 17000 call and selling 17600 strike.

  • A


    Should one wait till RBI policy next week before taking F&O exposure in rate sensitive stocks such as banks, realty and auto?


    That is a right approach for conservative traders, but one can enter in option segment by playing the stock specific action. We have a hope from upcoming policy so one can look at stocks like Bank of Baroda, Axisbank, IDFC, IDBI and Indusindbank from banking and Finance space. While in auto segment, our preferred picks are Ashokley, Maruti and Tvsmotors. We will avoid to suggest to take any risky bet on realty stocks as of now which are under the bear grips.

  • P


    Infosys seems to be active in the F&O segment. What strategy can one adopt for Infosys for October series?


    INFY is quite strong as it is holding its multiple support of 1050 mark. Although its in a range from last couple of weeks but the support is shifting to higher levels. One can adopt for a range bound strategy as it seems to move in between 1050 to 1150 levels.

  • A


    Metal stocks have been witnessing huge open interest in September series. What trend do you see for the metal pack and what would be your strategies for Hindalco and Tata Steel for the October series?


    Most of the Metals stocks are under pressure and adding built up of short positions. We are observing shorts rollover in to the next series so better to be cautious and till the China market does not get relief Metals would be traders favorite stocks to sell on rally. Tatasteel has been falling down from last one year and making lower top - lower bottom formation. It is not ready to hold any bounce back even after the market recovery. If it manages to cross and hold above 245-250 zones then only bears would opt for a short covering move. Hindlaco is trading near to 6 years low levels and participates in every bear phase of the market. So the trend is clearly weak and holding below 75 may take it to 68-65 levels on the downside. Although these are the beaten down and oversold counters but trends and data are not suggesting any kind of reversal as of now and better to use them to sell on rally.

  • K


    Data suggests that Zee Entertainment is already witnessing interest for October expiry. What strategy can one adopt for October series?


    All the media stocks are holding the positive trend and longs are intact specially in ZEEL and Dishtv. ZEEL is holding the gain above 50 DMA even after the softness of last two sessions and has been respecting its major support of 350-360 zones from last three series. One can buy with trading stop loss of support zones for an upside target of 420+ levels.