F&O Strategy: Buy Reliance, Amara Raja Energy, Gujarat Gas, suggests Rupak De as Indian stock market remain volatile

Stock market today: In the early trading session on Monday, the Nifty 50 and Sensex, which are the domestic benchmark indices, experienced a decline. This was due to foreign fund outflows and the overall weakness in Asian markets, particularly with Japan's Nikkei index plummeting by nearly 5%. Additionally, the decline in frontline stocks such as ICICI Bank and Reliance Industries also weighed down the markets. The Sensex saw a significant drop of 464.22 points, reaching 85,107.63 during early trade, while the Nifty 50 also experienced a decline of 133.85 points, falling to 26,045.10.

Derivative segment technical analysts report that Nifty 50 weekly contract shows the highest open interest at 27,000 for Calls and 25,000 for Puts, whereas monthly contracts have the highest open interest at 27,000 for Calls and 26,000 for Puts. The highest new OI addition occurred at 27,000 for Calls and 26,250 for Puts in the weekly contracts, and at 27,000 for Calls and 26,400 for Puts in the monthly contracts.

Foreign institutional investors (FIIs) increased their future index long position holdings by 4.08%, decreased future index shorts by 5.92%, and showed an increase of 56.13% in Call longs, 38.38% in Call shorts, 48.60% in Put longs, and 22.92% in Put shorts in index options.

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

Bank Nifty

For Bank Nifty the last expiry date was Wednesday, September 25. Bank Nifty has been holding above the previous swing high on the daily timeframe, indicating a bullish setup. However, following a sharp rally, the index appears to be showing signs of fatigue and may consolidate lower before resuming its upward trend. Additionally, a bearish Anti-Gartley pattern has emerged on the daily chart, signaling the potential for a short-term correction. This correction could bring Bank Nifty down to around 52,450, from which a rebound might occur. Resistance is seen at 54,500.

Open Interest Analysis: PUT writers added substantial unwinding of positions on Friday; while CALL writers added substantial positions at the 54,300 and 54,200 strikes. Maximum CALL open interest is seen at 54,500/54,000 strikes and maximum PUT open interest was seen at the 54,000 strike, indicating a weakness in the near term. Overall the CALL writers are outnumbering the PUT writers for current weekly expiry.

Nifty 50

For Nifty 50 the last expiry date was Thursday, September 26. The Nifty 50 has paused after several days of continuous gains. However, the short-term sentiment remains strong, as the index continues to trade above the important 21-day EMA. While the daily chart shows a bullish crossover, the momentum appears slightly fatigued. Market strength is likely to persist as long as the index stays above 25,900. On the upside, a fresh rally could begin if Nifty 50 breaks above 26,300, potentially pushing it toward 26,600. Conversely, a drop below 26,150 could lead to a decline towards 25,900, and further selling pressure may intensify below that level.

Open Interest Analysis: PUT writers added significant positions at 26,250/26,200 strikes; while significant CALL writing was visible at 26,250/26,400. Huge PUT open interest was seen at the 26,000 strike, whereas maximum CALL open interest was seen at 26,500, followed by 26,200, indicating a range-bound market, with a decent support level at 26000. Both PUT and CALL writers remained equally active in the weekly expiry.

Technical stock recommendations for the week

Buy Reliance Industries Ltd (RIL) at ₹3,052; Target Price: ₹3,150/3,300; Stop Loss at ₹2,949

The stock has risen above the falling trend line, indicating a potential short-term bullish reversal. Additionally, the recent price rally began after finding support around the recent swing low, further strengthening the case for a bullish reversal. On a broader scale, the stock has been trading within an upward-sloping channel, and it appears to be heading toward the upper band of this channel. In the short term, the stock could rise toward ₹3,300. Support is visible at ₹2,949 (on a closing basis), and a break below this level could cause the rally to lose momentum.

Buy Amara Raja Energy & Mobility Ltd at ₹1,370-1,385; Target Price: ₹1,455/1,500; Stop Loss at ₹1,314

The stock found support at an earlier swing low before the latest price rise. Additionally, it has formed a bullish engulfing pattern, a classic bullish reversal candlestick pattern. The RSI has also made a bullish crossover near the oversold zone, further supporting the potential for an upward move. In the short term, the stock could rise toward ₹1,500. Support is visible at ₹1,314 (on a closing basis), and a break below this level could cause the rally to lose momentum.

Buy Gujarat Gas Ltd at ₹610-616; Target Price: ₹630/650; Stop Loss at ₹594

The stock has been forming higher lows on the daily chart, indicating a bullish setup. Additionally, it has sustained above a critical moving average in the daily timeframe. In the short term, the stock could rise further towards ₹650. Support is visible at ₹594 (on a closing basis), and a break below this level could weaken the upward momentum.

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.