Last Week Snapshot
Indian stock markets had a good week last week with benchmark indices gained by almost 3.5% each. The week clearly belonged to some of the stocks from liquid universe like Suzlon, Unitech, IFCI, JPHydro, Ispat, etc which have gained more than 20% in a week's trading.
What's Next?
Now, what's next is the biggest question? The markets have now been standing at the threshold level of the breakout, on either side of the spectrum. P/E for the sensex have been around 18 X (times) which is not cheap. Hence, the current valuations justify a correction. While on the other side, liquidity conditions, increase in risk-appetite and low interest regime favors further upside in the market.
My view goes for former i.e., correction overdue for a simple logic of risk-vs-reward. The reward on the upside is limited to 10-15% maximum. We can't see markets re-climbing 21000 levels again very soon. While on the downside, a test to 12000 levels on Sensex looks reasonable.
Hence, I would suggest if one can partially book their profits and stay in cash for the next two months. Or, one may selectively put the money in selected fundamental stocks like NTPC, Power Grid, Sun Pharma, Cipla, etc which are less volatile and give less pain on the downside.
FII View
FII on Friday had been bullish on the Indian stock markets. In the cash segment, FII made net purchases of 832 crores. Top Gainers on Nifty include selective stocks like Hero Honda, Grasim, BHEL, Infosys, while top losers include ITC, Suzlon, Rel Infra, SBI and Reliance Power.
In the Index futures segment, FIIs made net purchases of Rs. 1100 crores. The strange part here is that on Thursday, FIIs made net sell of 1100 crores again, with addition of 40000 new contracts. This completely reverse strategy on Friday is suprising and shows some complex trading strategy coming into play.
In the Index Options segment, FIIs made net purchases of 90 crores, with addition of around 28000 new contracts. Stocks Futures and Options didi not see much activity on Friday.
Overall, the markets look into wait-and-watch mode. It is waiting for some definite clues to take further direction from hereon. Hence, I would perceive a short term breakout this week, with increase in volatility. Hence, one is advised to adopt a strangle strategy of buying both Calls and Puts for Nifty. The premiums have been attractive at the moment for some of the contracts. (These are given below in Stocks View section)
Stocks Views
Gelnmark Pharma (suggested on 3rd June) hit its target price of 263. It is now likely to fall back to 240 levels. The remaining calls are still intact. There have been two new additions on stocks views which are given below:
Scrip Name - Buy/Sell - Recommended Price - Target Price - Stop Loss Price
JM Financial - Buy - 60.5 - 71 - 55
Sesa Goa - Sell - 159.35 - 145 - 169
Option Strategy - Buy Nifty 4800 Call and 4600 Put - this pair would cost around 250 Rs *50 = Rs. 12500, but can give good returns, if markets see any breakout this week. The strategy is only applicable for next 2 weeks.
Wishing you a great week ahead!!
Indian stock markets had a good week last week with benchmark indices gained by almost 3.5% each. The week clearly belonged to some of the stocks from liquid universe like Suzlon, Unitech, IFCI, JPHydro, Ispat, etc which have gained more than 20% in a week's trading.
What's Next?
Now, what's next is the biggest question? The markets have now been standing at the threshold level of the breakout, on either side of the spectrum. P/E for the sensex have been around 18 X (times) which is not cheap. Hence, the current valuations justify a correction. While on the other side, liquidity conditions, increase in risk-appetite and low interest regime favors further upside in the market.
My view goes for former i.e., correction overdue for a simple logic of risk-vs-reward. The reward on the upside is limited to 10-15% maximum. We can't see markets re-climbing 21000 levels again very soon. While on the downside, a test to 12000 levels on Sensex looks reasonable.
Hence, I would suggest if one can partially book their profits and stay in cash for the next two months. Or, one may selectively put the money in selected fundamental stocks like NTPC, Power Grid, Sun Pharma, Cipla, etc which are less volatile and give less pain on the downside.
FII View
FII on Friday had been bullish on the Indian stock markets. In the cash segment, FII made net purchases of 832 crores. Top Gainers on Nifty include selective stocks like Hero Honda, Grasim, BHEL, Infosys, while top losers include ITC, Suzlon, Rel Infra, SBI and Reliance Power.
In the Index futures segment, FIIs made net purchases of Rs. 1100 crores. The strange part here is that on Thursday, FIIs made net sell of 1100 crores again, with addition of 40000 new contracts. This completely reverse strategy on Friday is suprising and shows some complex trading strategy coming into play.
In the Index Options segment, FIIs made net purchases of 90 crores, with addition of around 28000 new contracts. Stocks Futures and Options didi not see much activity on Friday.
Overall, the markets look into wait-and-watch mode. It is waiting for some definite clues to take further direction from hereon. Hence, I would perceive a short term breakout this week, with increase in volatility. Hence, one is advised to adopt a strangle strategy of buying both Calls and Puts for Nifty. The premiums have been attractive at the moment for some of the contracts. (These are given below in Stocks View section)
Stocks Views
Gelnmark Pharma (suggested on 3rd June) hit its target price of 263. It is now likely to fall back to 240 levels. The remaining calls are still intact. There have been two new additions on stocks views which are given below:
Scrip Name - Buy/Sell - Recommended Price - Target Price - Stop Loss Price
JM Financial - Buy - 60.5 - 71 - 55
Sesa Goa - Sell - 159.35 - 145 - 169
Option Strategy - Buy Nifty 4800 Call and 4600 Put - this pair would cost around 250 Rs *50 = Rs. 12500, but can give good returns, if markets see any breakout this week. The strategy is only applicable for next 2 weeks.
Wishing you a great week ahead!!
0 comments:
Post a Comment