Market Trade Lower; Nifty Below 26,000

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Watch Market Trade Lower; Nifty Below 26,000 - NDTV Profit on Dailymotion

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00:00We have Ruchit Jain of Phypesa and Vinay Rajani of HDFC Securities is joining us on the show.

00:05Good morning to both of you and thanks for joining in. Vinay, I'll start with you. Your

00:10view on the markets, it does seem like the Nifty is now starting to weaken just a tad bit. Are we

00:15looking at about a consolidation here on? Yeah, good morning and thanks for having me on the

00:20show. So definitely there is a weakness and 0.9% fall in today's session on the back of Japanese

00:25markets. So global Q is a bit negative. However, the Chinese and Hang Seng markets,

00:29the Songbom markets are performing very well and that is supporting the metal index as well. So

00:36there is no across the board selling in the market. Some sectors are still performing like

00:40most of the metal stocks are doing well, some FMCG stocks, some cement stocks are performing well.

00:46So there is no across the board selling in the large-scale stocks. But as far as Nifty is

00:50concerned, I see a strong support around 25,870, which happens to be the previous swing low. So

00:56which was a low which was formed 3-4 days back. So that can act as a support. So yes, there was

01:02some reason, there was some overbought scenario as far as derivative data by the FIO is concerned.

01:09FIO's long to short ratio reached almost 82%. So above 4 was the ratio for long to short ratio.

01:15There was a bit of overbought scenario there and that's why we are getting some cues and

01:21profit can be seen in Nifty. The next support is at 25,870. Positional setup is still intact.

01:28I don't see positional weakness in the market. The stocks which were actually performing strong

01:34in the last week, they have seen some profit booking. The reliance industry has fallen by 2%

01:38today. Most of the private sector banks have seen a fall. But going by the history, we've seen,

01:43we saw that private sector banks positionally were doing very well. So this is just a profit

01:48booking on the back of weakness in the private sector banks and the stock like reliance.

01:52So this could be short-lived. I feel that though it can extend the fall from here, but there could

02:00be very limited as far as Nifty is concerned. I see strong support around 25,900, 25,870

02:06from Nifty could reverse again and resume the uptrend. As far as Bank Nifty is concerned,

02:11Bank Nifty has formed actually a very shooting star pattern on the weekly chart last week. So

02:16that is giving some negative signal. But in that too, I see a limited downside. There is a strong

02:22support around 52,750, where 21 days exponential moving average and support rate indicator is

02:29giving support. For Bank Nifty, there is a support at 5750. And for Nifty, I would suggest that 25,870

02:38to 25,900 could act as support. So there could be some profit booking extension from here,

02:44but that would be limited at lower level, I would recommend going low. And that support

02:48lies around 100 to 80 points still down from in Nifty from here. All right. Richard,

02:55welcome to the show. How are you reading both these key benchmark indices right now?

03:00Hi, very good morning, Aakam. Very good morning, Vinay. Well, from a near-term perspective,

03:05post that rollover data which we witnessed on Friday and Thursday, we are a bit cautious on

03:10the markets from a short-term perspective and advising our clients to shift more on to some

03:16of the defensive units. So primarily, if we look at the derivatives data, then although the

03:19rollovers were good than the average, but the entire long rollovers has been done only from

03:25the FIS. If you look at historical data, then post that US Fed rate cut, this entire move in the

03:32market has been led by FIS buying, but client section, which includes the retail traders and

03:36the HNI traders, they have not participated in the move. Now, FIS have about 81% positions on

03:43the long side. And historically, if you look at this data, whenever these positions reach 80 to

03:4785%, these are long heavy positions and unwinding is seen. So they are already long heavy and for

03:54markets to move up further, there is very less room for FIS to create fresh new longs. Now,

03:59the other thing is that this up move could be extended if client section cover the short

04:04positions and they go long, but that doesn't seem to be the scenario now because they have not

04:09forming this, they have not been forming long positions in this recent up move. So I think in

04:14absence of their long formations, if the FIS long short ratio are long heavy, then there could be

04:19some unwinding of long positions. And last week on Thursday, Friday, we had already seen some

04:23divergence in the broader markets in Nifty Midcap and the Small Cap Index. So it may just be a

04:28correction within an uptrend, but I think the markets should see some down move towards 25,700

04:34to 750 range where major support would come in. So from a near term perspective, we are advising

04:40to stay a bit cautious and shift to more of a bit of defensive names rather than chasing high

04:44beta names. Well, defensive is the way to be at the moment considering, well, markets are looking

04:52rocky at the moment, that's the word coming in. But let's put the spotlight on stocks now. And

04:57I reckon that there'd be more gainers, pardon me, there'd be more losers than gainers in today's

05:01year of trade this Monday morning because it's not turning out to be the most encouraging of

05:05setups. And well, lo and behold, you have about four of the top gainers in terms of open interest

05:13towards the downside. Hedo Motocorp, Reliance Industries and Goldrich Properties, all of them

05:17are looking at sharp cuts. Reliance Industries is looking at a cut of around 2.3 percent. That's

05:22a heavyweight there. And clearly you know that it's one of the main reasons why we are looking

05:27at weakness on the indices. Atul, of course, is marginally in the green, wouldn't necessarily call

05:33it long. But in stocks which are seeing unwinding, we once again have Polycar which is under pressure,

05:40same for Bajaj Auto. Bajaj Auto has had a tremendous run. And you know, for that matter,

05:46Samvardhan as well has had a pretty good show of strength of late. But today it's looking at long

05:51unwinding. And Muthoot Finance is the other one. That said, what are the stocks which are on the

05:56radar of our experts? Ruchit, back to you on stocks that are looking good to you.

06:00So a couple of names, as I said, a bit low beta names. One more or less from the pharma and

06:06hospital space. So Sun Pharma would be one stock where today's weakness should be used as a buying

06:10opportunity. So primary uptrend has been seen in the stock. Even at all time highs, the stock has

06:15witnessed very good volumes formation in the cash segment. And even derivatives data is positive.

06:19So we advise going long in today's correction in Sun Pharma with stop below 1870 for potential

06:25near-term targets around 2080. And Apollo Hospitals would be my second pick, where again,

06:30focus is same that relative low beta name where not much volatility is there. A steady up move

06:35has been seen in the stock with long positions still intact in the stock. And the breakout also

06:40was seen recently from the consolidation phase. So Apollo Hospitals should be bought with stop

06:45below 7100 for potential targets around 7550. All right. Well, that's as far as Ruchit goes.

06:54But Vinay, what about you? Stocks on your radar this morning.

06:57Yes. As I said, the metal sector is performing well and it has been doing good for the last

07:01two, three sessions because of the Chinese Qs and the dollar index, which is under pressure.

07:06So dollar index is having a negative correlation with the metal sector. You've seen in the past

07:10that whenever dollar index falls, metal used to outperform. So that's what happening in metal

07:15sector, the high beta sector. And whenever it moves, it can move. Though we have seen three,

07:20four days of rally continuous, but still I feel that the nature of the metal sector,

07:26it can continue to do well in this kind of scenario. So money is rotating from one sector

07:32to another sector. And in the coming days, we may see outperformance coming to the metal. So

07:37though it is there and I think continuation of the outperformance will be there from the metal space.

07:42So JSW Steel, which actually looks very good on the charts and was the leader when other metal

07:49stocks were not moving. JSW Steel was one of the stocks which actually hit an all-time high first

07:54and participated well in the market. So I think this participation will continue and JSW Steel

08:01October future can be traded long. 1.025 is the level around which one can go long in October

08:06future. Stock price I would suggest at 1.005. On the upside, I'm expecting a target of 1.055.

08:12The second stock I would pick is from the FMC space, the consumption space is the Pidilite.

08:17So Pidilite has hit an all-time high and has been resilient in the falling market. So

08:23it has given a breakout on the consolidation and looks quite strong. So this entire space,

08:28like the paint sector and the stock which are related to and directly or indirectly related

08:33to paints or FMC, we can say, can perform well. Asian paint is also looking good. So Pidilite

08:38can be traded long around 3.420, 3.425, one can go long. I would suggest a stop-loss at 3.370.

08:45On the upside, I'm expecting a target of 3.545. So 3.545 is my target and both recommendations

08:52are being given for next two to three trading sessions time horizon. Okay, well, there you

08:58have it. Those are some of those views coming in from our experts. We'll shift focus to queries

09:03and the first one is on NMDC. I'll take this one up with Ruchit. We have Varun from Delhi

09:10and he says that he has the 235 call of NMDC and he's paid a premium of 10. And this question is,

09:18should I exit or should I hold? Let's pull up the specific options, see firstly where the spot is.

09:25So the 235 call is actually in the money at the moment considering NMDC is currently trading at

09:30around 244. He's paid a premium of 10. It's currently trading at 16. So he's sitting on a

09:3760% profit based on the capital that's been used out here because of course when you buy options

09:46that you only pay for the premium that you have bought it for. So at the moment sitting on a

09:51potential profit. Ruchit, what would your advice be for Varun? The short-term momentum looks quite

09:58strong for NMDC. Today when we have seen that rise in the I&O prices overall, the stock has

10:06gained good momentum and this up move could continue in the near term towards 249-250 which

10:13were the swing highs at the start of August. So I think for now you can continue to hold on but

10:17when the stock comes around at 249-250 those would be good levels where you can consider profit

10:22booking on your existing long positions in the option segment. All right, that's the view coming

10:27in on NMDC but from there on we move on to a query on Tata Power. I will take this one up with Vinay.

10:36The query comes from Yash. He's from Kolkata and he says that he has the Tata Power 450 call

10:43and had paid a premium of around 15. Is it a good time to exit? Let's see where the spot is

10:49for Tata Power at the moment. The 450 call again is in the money for the viewer and it does seem

10:59like the viewer is also sitting on a little bit of gains coming in. The premium quoted here is

11:06at around 36 and the question really is what does the viewer do at the moment considering

11:13the viewer bought the call for 15? Vinay, should he book profits because he's clearly

11:20made more than, well he's clearly, yeah, certainly doubled, more than doubled his option

11:26premium right now. Yeah, so definitely he has taken a nice trade and already into a good profit. This

11:33is the stock which was outperformer and actually hit an all-time high last week. Only the high

11:38was 495. Today it has witnessed some profit booking. Still there is no sign of trend reversal

11:44but as we've seen already into a good profit and options if it consolidates here time because

11:50of the time value, time decay, the premiums will start coming down. So though positionally it is

11:55looking very strong on the chart. It has got potential to extend the rally but some sort of

11:59consolidation around this level only will take the premiums on the lower side. So I would suggest

12:04that once the today's low is broken again which is 473 then one should take profits out because

12:12positionally it may perform well in next 2-3 weeks but if it consolidates here also then

12:17although because as I said time decay will be there and because of that premium will come down.

12:22So I would suggest that keep a stop loss at 5 rupees lower from this level 473 is today's low.

12:27If that is breached again then one should exit the long position. That would be the advice in

12:31the option trading. All right, there you have it. That's your advice on Tata Power coming in

12:37and with that we will thank both our experts,

12:41Ruchit and Vinay for joining us and taking us through their views on the market.

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