F&O Strategy: Buy BEL, Kansai Paints, suggests Rupak De as Indian stock market rises post 5-day fall

Stock Market News: The domestic benchmark indices increased on Monday, breaking a five-day losing streak, thanks to ICICI Bank's stronger-than-expected quarterly profits that boosted the influential financial sector. The Nifty 50 has declined approximately 7.5% from its all-time high on September 27, affected by ongoing foreign selling over the past 20 sessions and a generally underwhelming earnings season so far. Additionally, the benchmark recorded losses in the previous five trading days.

At 11:17 IST, Nifty 50 index was trading at 24,397.05 points, reflecting an increase of 216.25 points or 0.89%, whereas the Sensex index was at 80,245.58 points, indicating a rise of 851.44 points or 1.07%.

According to technical analysts in the derivatives segment, the recent correction in the markets has been mainly due to foreign institutional investors (FIIs) selling in the cash segment and their short formations in the index futures. However, they covered some of their short positions and added few longs in Friday as the index is in oversold zone. This hints at probability of a pullback move in the expiry week. Hence, we expect some pullback move towards 24,470 and above that to 24,700. On the lower side, 24,000-23,800 has multiple support levels.

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, October 23. In Friday's session, Bank Nifty witnessed a breakdown below a rising trendline, signaling a shift toward bearish sentiment. The index closed below its 100-day EMA, indicating strong downside pressure. Traders are advised to adopt a sell-on-rise strategy, with immediate support at 50,492 and resistance at 51,200-51,300 levels. A bullish outlook on the index should only be considered if it closes above the 51,500 mark, where significant CALL writing is visible, confirming a potential reversal. Until then, caution is warranted amid the prevailing bearish trend.

Open Interest Analysis:PUT unwinding at various strikes were visible on Friday; while significant CALL writing was visible at 51,500 and 51000. Maximum CALL open interest is seen at 50,000 and maximum CALL open interest was seen at the 51,500 strike, indicating the broader range for the near term. Overall, the CALL writers seen marginally outnumbering PUT writers in the weekly expiry.

Nifty 50

For Nifty 50 the last expiry date was Thursday, October 24. The Nifty 50 index has dropped below its recent consolidation level as the absence of sustained buying pressure led to increased selling. It has now fallen decisively below 24,350, indicating a weak market sentiment. Any upward movement toward 24,300-24,400 may be an opportunity to reduce long positions. The index has near-term support at 24,000, and a break below this level could signal a potential downtrend.

Open Interest Analysis:PUT writers seen to be unwinding their position at various strikes on the first day of the new expiry; while CALL writing activities was visible at 24,300 and 24,200. Maximum CALL and PUT open interest position was seen at the 24,500 and 24,000 strikes respectively, indicating a broader range for the Nifty 50. CALL writers seen outnumbering PUT writers in the weekly expiry.

Technical stock recommendations for the week

Buy Bharat Electronics Ltd (BEL) above ₹273; Target Price: ₹290; Stop Loss at ₹265

The stock has formed a doji-like pattern on the daily chart, indicating a potential for a mild bullish reversal in the near term. It recently found support at the 200-day moving average before its upward movement, with the RSI showing a bullish crossover. In the short term, the stock may target ₹290, with support positioned at ₹265.

Buy Kansai Nerolac Paints Ltd above ₹280; Target Price: ₹300; Stop Loss at ₹269

The stock has broken above the consolidation high on the hourly chart, indicating growing optimism. It has also crossed above the 55-EMA on the hourly timeframe, with the RSI displaying a bullish crossover. In the short term, the stock may target ₹300, with support positioned at ₹269.

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.