investment strategies: private banks, autos and metals may see buying interest: analysts

Private banks could be supportive of the RBI’s monetary policy on Friday. Autos, pharmaceuticals and metals stocks are also expected to trade with a positive bias and could gain 8-10% in the near term, technical and derivatives analysts say. ET spoke to three analysts about possible trading and investing strategies, with Nifty falling for four consecutive sessions last week.


What should investors do this week?
Ahead of the RBI policy outcome expected on October 8, we believe private banks may outperform Nifty and even rollovers have been pretty strong in bank names. In Nifty, one can seek to launch a Bull Call spread strategy by buying 17,500 Call and selling 18,000 Call on October 7th. According to quantum models, in the short term, gains of 12 to 15% can be observed in Tata Power and Metropolis.


What should investors do this week?

The concentration of options data is seen at 17,400 Puts and 18,000 Calls with signs of Put writing seen at 17,400 strike prices and accumulating at 17,500 straddle. Although FIIs remained net buyers of the cash segment in September, they were on a selling wave last week. We can look to buy Nifty 14 October 17,800 Calls in the range of Rs 100-120 (Friday closing Rs 91) for a target of Rs 250 and with a stop-loss at 17,450 spot. Advise to cover with puts only if 17,400 are exceeded on Nifty. At the sector level, automotive, pharma and metals remain positive from here with an upside potential of 8 to 10%. Our first choice remains Tata Motors for a target of Rs 360 with a stop loss at Rs 323.


What should investors do this week?

We expect bank, power, telecom, oil and gas and real estate stocks to perform well in the near term. One can focus on Reliance, Bharti, NTPC, Canara Bank, Tata Motors, United Spirits, M&M Financial, ONGC and DLF in the short term. Our strategy for the week is Bullish Call Ladder, which consists of buying a lot of Nifty 17,550 Call at Rs 114 and selling a lot of 17,750 Call at Rs 44 and a lot of 17,950 Call at Rs 15. All options have a weekly expiration of October 7th. We observed that the highest open interest concentration on the buy side prevails in the strike price mentioned above, indicating an area of ​​likely resistance; and to benefit from it at a lower cost, we propose this strategy. The maximum profit of Rs 7,250 will be reached at 17,750 levels, while the strategy will start recording losses above 18,100. The cost of the strategy involves a debit of Rs 2,750 which is the maximum loss if Nifty is trading and remains below 17,550 levels. However, above 18,100 it is advisable to exit the strategy altogether to avoid unlimited losses. The breakeven points for the strategy are 18,095 on the upside and 17,605 on the downside.

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