F&O Strategy: Buy Godrej Consumer, ICICI Bk, suggests Rupak De as Indian stock market rebounds after tumbling last week

Stock market today: Monday saw the domestic benchmark indices, the Sensex and Nifty 50, beginning the day positively, mirroring the upward trends observed in global markets. In the preceding week, Indian markets recorded a decline of more than 4%. Strong US jobs data alleviated worries about a recession in the world's largest economy, leading to information technology stocks driving gains in domestic shares on Monday.

The Nifty 50 saw an opening at 25,084.10 points, marking a surge of 69.50 points or 0.28%. Similarly, the Sensex had an opening at 81,852.01, experiencing a gain of 163.56 points or 0.20%.

While market analysts predicted that Indian stock markets would continue to perform well this week, they also pointed out that the geopolitical environment and the upcoming earnings season might have a impact.

According to technical analysts in the derivatives segment, Foreign Institutional Investors (FII) have unwound their long positions in the index futures segment and have also formed new shorts. Their long-short ratio has reduced from 81% at the start of the series to 58% now. Until we see change in the FII's stance, our markets could continue to see selling pressure on pullback moves. The support for Nifty 50 is placed around 24,800.

Technical views by Rupak De, Senior Technical Analyst, LKP Securities on F&O market

Bank Nifty

For Bank Nifty the last expiry date was Tuesday, October 1. Bank Nifty faced selling pressure near the 52,200 level, closing below its 50-day EMA and forming a bearish candlestick on the daily chart. This indicates a strong bearish sentiment and the dominance of bears in the market. The current outlook suggests a "sell on rise" strategy. Bank Nifty has key support at its rising trendline around 51,000, while resistance is expected at 51,900. The index’s failure to hold above these levels reinforces the cautious approach in the market.

Open Interest Analysis: PUT writing was not significant on the 2nd day of the new expiry; while significant CALL writing was visible at 52,000 indicating strong resistance for the short term at 52,500. Maximum CALL open interest is seen at 52,500 and maximum PUT open interest was seen at the 50,500 strike, indicating a big range for the near term. Both PUT and CALL writers remained equally active in the weekly expiry.

Nifty 50

For Nifty 50 the last expiry date was Thursday, October 3. The Nifty 50 faced a second straight day of bearish pressure, with continued trading below crucial levels leading to a correction towards 25,000. Market sentiment has significantly weakened, with higher levels now acting as selling opportunities. On the downside, support is expected around 24,750, while resistance is noted at 25,300 on the upside.

Open Interest Analysis: PUT writing was not significant on the first day of the new expiry; while significant CALL writing was visible at 25,400 indicating strong resistance for the short term at 25,400. Maximum PUT open interest was seen at the 24,500 strike, whereas maximum CALL open interest was seen at 25,500, indicating a broader range for the market. Both PUT and CALL writers remained equally active in the weekly expiry.

Technical stock recommendations for the week

Buy Godrej Consumer Products Ltd at ₹1,342; Target Price: ₹1,430; Stop Loss at ₹1,297

The stock has been trading near a rising trendline, which may provide strong short-term support. Additionally, the stock has been forming a pattern of higher highs and higher lows. A recovery from the current level is possible unless the stock falls below 1,300. On the higher end, it could potentially rise towards 1,430.

Buy ICICI Bank Ltd at ₹1,257; Target Price: ₹1,310; Stop Loss at ₹1,229

The stock has risen after forming an inverted hammer pattern on the daily chart. The trend is likely to stay strong as long as it remains above the 50-day moving average (50DMA). On the upside, it could move towards 1,310, with support located at 1,229.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.