Futures & Options Trading Strategy With Chandan Taparia
F&O Show | #MOFSL’s Head of Technical & Derivatives Research Chandan Taparia discusses the futures and options trading strategy with BQ Prime’s Agam Vakil. #BQLive
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00:00 Hello and welcome. This is BQ Prime. I am Agam Bakil and you are watching the FNO Show,
00:06 a show in which we take you through all that is happening in the market, specifically in
00:10 Indian equity derivative space. To start off with what's happening with our markets, while
00:15 we did start off with a significant amount of weakness after the repercussions and perhaps
00:21 some implications that a lot of participants are drawing from West Asian conflicts, well,
00:28 implications and result as far as your crude and your dollar is concerned. Because of that,
00:34 we saw some weakness seeping in, at least as far as the open is concerned. But since
00:39 the open, we have in fact seen both the benchmarks, as the Nifty as well as the Bank Nifty, recover
00:44 from these lows. In fact, both these industries are currently trending near day's highs, though
00:51 still in the red. It's a matter of whether or not we actually do see some amount of covering.
00:59 The Bank Nifty, however, is a lot weaker as compared to the Nifty. And we're going to,
01:04 of course, pose these questions with the expert that we have today for you all. But in terms
01:10 of this week's expiry, it's all about the Nifty. And the Nifty, of course, is currently
01:16 hanging at around just short of the 19,600 mark at the moment. And this is after, once
01:24 again, Nifty testing 19,500. And it is essentially the very same options which are also very
01:33 active, 19,600 and 19,500. Cause and puts respectively there is where we are seeing
01:40 significant amount of addition in open interest today. And as far as the Bank Nifty is concerned,
01:46 as I was suggesting, it's a lot weaker as compared to the Nifty, a little more taking
01:52 your profits, if what have you. And it's currently actually just sitting shy of the 44,000 level.
02:01 Slightly above that. And of course, the traders are looking to defend that market, at least
02:06 for those who are long in the market are looking to defend the 44,000 mark at the moment. And
02:12 that's exactly where the puts have maximum open interest as well. Though we are seeing
02:17 significant amount of addition around the 43,800 puts as well in terms of today's year
02:23 of trade, 44,000 call, also looking at some amount of writing coming through. That said,
02:28 let's pose these questions to our expert as well and see where these markets are going.
02:35 Joining us today to take us through and elucidate some of these trends is Chandan Taparia. He
02:40 is the head of technical and derivative research at Motilal Oswal. Chandan, good morning and
02:45 thank you so much for joining in. Happy to see you after so long. Can you tell us about
02:50 how you what you are making of these markets? And where does the Nifty specifically go forward?
02:57 Good morning. Thanks, Agam. Thanks for having me. Looking at the Nifty, the index got stuck
03:04 in a broader range from last couple of days. It's just flirting or hoarding near to 50
03:09 exponential moving average. At the beginning of last series, we witnessed good run up from
03:14 19,225 to 20,222. But in last four weeks, we have seen correction to us 19,333 and now
03:22 hoarding near to 19,600. The good part is that even after geopolitical concerns, the
03:27 index is holding the support zone. And we believe that the selective sector and the
03:32 stocks from Nifty IT will find the support base buying to hold the index on lower zone.
03:37 So as of now, 19,442 to 19,800 is the broader range for Nifty index. We will go with buy
03:44 on decline exchange with support of 19,442. If I look at the data factor, FI long sold
03:50 ratio is near to 25-27%, which indicates that they are tending to the net seller. They are
03:56 having the short position in the market. If I look at the put call ratio, that is comparatively
03:59 OK, but volatility is not increasing up. So that is the reason that we are not turning
04:04 negative. We will go with range bound bias, or we will go with buy on decline exchange
04:08 in the broader market.
04:09 OK, a very crucial point mentioned there by Chandan. You know, despite all the negatives
04:15 that are coming through, we are not seeing a substantial hike in volatility, a factor
04:19 which is becoming even more and more important. And a lot of this is very evident in your
04:24 option premiums as well. But Chandan, I shift focus to Bank Nifty as well. And now we are
04:30 just sitting at around the levels of 44,000. Is your view similar as compared to the Nifty
04:38 as on the Bank Nifty?
04:41 If I compare Nifty versus Bank Nifty, then some underperformance is clearly visible in
04:45 Bank Nifty. Because Nifty is still holding above 50 DMR, but Bank Nifty is holding below
04:49 50 DMR. So resistance are shifting lower. If I have to find out one weak structure,
04:54 then I'll find Bank Nifty. If I have to find out the strongest structure, then I'll go
04:58 with the Nifty because of the participation in IT and few other things. So Bank Nifty
05:03 view is mixed. Here we have multiple hurdles near to 44, 444, 445, and because of that
05:10 hurdle, it can retest to the key support of 43,600. So some more decline could be there
05:16 in Bank Nifty towards 43,600. But in Nifty, we'll go with buy on decline stance. So you
05:20 can understand the slightly negative tone in Bank Nifty than Nifty.
05:25 Okay, fair enough. With that, we shift focus to a handful of stocks that we want to talk
05:31 about. I'm going to pull up MCX. Of course, there's positive news coming in in today's
05:35 day of trade for MCX. So we've started to see that up move for that particular stock.
05:42 Probably a lot of longs. But do remember, even on Friday, after the substantial weakness,
05:47 we did see MCX cover up for all that weakness and eventually see some substantial gains
05:52 come through. So this largely looks like some follow up buying coming in. The entire IT
05:59 pack is in focus right now. Do remember, TCS, HCL Technologies and Infosys, all of them
06:04 will be announcing their earnings this week. In fact, starting off on Wednesday onwards.
06:10 And all these counters are in fact trending in the green. I reckon that there are some
06:15 amount of positions being built just before the earnings coming through. So keep an eye
06:21 on them. And on the losing end, we do have something like an Interglobe Aviation and
06:28 Canada Bank. But, you know, well, largely the markets are stable. I reckon there has
06:34 been a substantial amount of pressure, at least as far as the benchmark is concerned,
06:38 on account of heavyweights like SBI and HTFC Bank, to a certain extent, L&T as well, which
06:45 is weighing and perhaps pressing down on the benchmark indices. That said, Chandan, I'll
06:50 come back to you on some stocks which are on your radar. What are you looking at and
06:55 how are you playing them? Yeah, so like first you talked about MCX, so let me comment on
07:00 that. The major trend of the counter is positive. Stock is trading at 24 months long consolidation
07:06 breakout. I remember in the month of October 2021, it made high near to 2135 and now it's
07:12 back to the low zone. So major trend is intact and looking for fresh breakout and nearly
07:16 towards 2200 level. For recommendation, I'll go with BSOFT because Nifty IT is doing well
07:22 and BSOFT has given a negation of lower levels on the weekly and holding the gains. So recommending
07:27 to buy on BSOFT with support of 510. And here we can see a move towards 545-45 level. Apart
07:34 from BSOFT, we can focus on counter like TVS Motor on AutoPick, continuously holding the
07:40 multiple support of 1480. So one can buy with support of 1480-1485 and see an upward move
07:46 towards 1575. So selective IT and selective auto stocks are holding and have potential
07:51 to generate alpha and outperformance to the market even after some profit working in the
07:56 index from higher levels due to the geopolitical concern.
07:59 Okay, so those are some views on stocks specifically coming in from Chandan Tabagia of MOSL. But
08:06 Chandan is also of the opinion that Nifty at the moment is slightly stronger perhaps
08:12 as compared to the Bank Nifty. So watch out for that. And we'll be watching out for a
08:17 handful of these factors that Chandan has also spoken about. But on that note, Chandan,
08:21 I'm going to thank you so much for joining us and taking us through your views on the
08:25 markets. And we'll be signing off for now. But don't go anywhere. There's lots more lined
08:30 up. So stay tuned to BQ Prime.
08:32 Thanks, everyone.
08:41 [BLANK_AUDIO]