Pharma, financial counters top on traders’ chart

Traders are betting on pharma and financial services in the August derivatives series amid the bullish momentum in the stock market. They are also betting on auto stocks as monthly sales data exceeded expectations. ET takes a look at top trading bets in the August futures segment and what the future holds for these stocks:

Dr Reddy’s Lab
CMP: Rs 4,110.4
% Change in open interest: 31.9 %
Change in share price: -3.5

Dr Reddy’s Laboratories failed to cheer the market despite June quarter net profit doubling. Analysts see concern over the US business and pressure on operating performance as key drags. These concerns have prompted traders to build bearish bets on the stock. Chandan Taparia, derivative analyst at Motilal Oswal, said the weakness could continue and the stock could drift down to Rs 3,950.

Max Financial Services
CMP: Rs 874.6
% Change in open interest: 26.1 %
Change in share price: 5.8

The stock has seen a technical breakout and could rise 6% more, according to analysts. The stock has seen a consolidation breakout of the last 24 weeks. “The stock can go to `925, one can buy at current levels,” said Taparia of Motilal Oswal.

SBI Life Insurance
CMP: Rs 1,313.3
% Change in open interest: 12.17 %
Change in share price: 10.23

Traders have built bullish bets in SBI Life Insurance owing to strong June quarter results. The company last week reported an 18% year-on-year growth in its net profit at Rs 263 crore in the June quarter. “SBI Life has outperformed peers on growth and VNB (value of new business) margin. Best-in-class performance deserves re-rating,” said Edelweiss.

Sun Pharma
CMP: Rs 918.7
% Change in open interest: 2.6 %
Change in share price: 10.1

The drug maker’s strong showing in the June quarter prompted traders to add bullish bets. Sun Pharma reported a 42.7% year on-year increase in consolidated net profit to Rs 2,060.8 crore in the June quarter. “The technical set up is showing that the stock may rise to Rs 1,020 if it goes above Rs 945,” said Rajesh Palviya, headtechnicals and derivatives at Axis Securities.

Mahindra & Mahindra
CMP: Rs 1,237.7
% Change in open interest: 4.9 %
Change in share price: 7.7

Shares of Mahindra & Mahindra hit a record high on Monday and bullish bets were formed in its August futures as the auto maker reported a 31% jump in its overall sales in July. “M&M is trading at a lifetime high and the momentum could continue. The stock can rise to `1300 with support at Rs 1,195,” said Taparia of Motilal Oswal.