Any rally without net FPI inflows unlikely to sustain

Technical and derivative analysts expect the Nifty to rise further in the coming week, up to 16,000 levels. The Nifty gained 2.7% last week to 15,699.25, outperforming most of the Asian peers.

SUDEEP SHAH
HEAD, TECHNICAL & DERIVATIVES RESEARCH, SBI SECURITIES

What should investors/traders do?
Investors should look to buy the dips until 15,450 levels are not breached on the downside for Nifty, and should accumulate quality stocks while traders should focus on stocks and sectors that are relatively outperforming the Nifty as of now. Preferring quality largecaps and high-quality mid-caps while staying away from small-caps would be the key to survive the current volatility. However, considering the fact that this may be just a short-covering rebound in the overall downtrend on the larger time-frame charts, traders should focus on managing overnight risks by hedged bets and appropriate position sizing. With a view to capture the upside momentum, we are suggesting a strategy where index traders can initiate a Nifty Bull Call Spread which involves buying 15,700 Call option and selling 15,900 Call option with a premium cost of 90 and a potential reward of 110. Traders can keep a stop loss of 50 points of the premium.

ABHILASH PAGARIA
HEAD-EDELWEISS ALTERNATIVE AND QUANTITATIVE RESEARCH

What should investors/traders do?
Nifty is going to be under ranged consolidation and moving above 16,250 will be a tall task until foreign portfolio investors start participating. In case a shortcovering led rally leads the Nifty index to 16,250 without any FPI positive flows in the cash segment, then one should look to build short positions with 16,370 as a strict stop loss. Overall, we expect that the markets may stay highly stock-specific with both high- and low-beta stocks from select pockets doing well. As per our quant models, auto and fast-moving consumer goods can outperform the broader indices, while banking continues to remain our favourite sell on rally. The metals index is at crucial support. From an open offer trade perspective, ACC and Ambuja can be accumulated. Lucrative merger arbitrage opportunity is available in buying Shriram City Union Finance and going short Shriram Transport Finance.

CHANDAN TAPARIA
DERIVATIVES ANALYST, MOTILAL OSWAL

What should investors/traders do?
Investors can use these declines to add good-quality stocks from auto, private banking, financial and consumption sectors while traders can play with bounce-back moves with proper position sizing to deal with this volatile market. One can go with a Bull Call Spread by buying 15,750 Call and selling 15,950 Call to play the bounce towards 16,000 zones. Stock specific positive on in M&M, TVS Motor, Maruti, IGL, Eicher Motor, ICICI Bank, Bata India, Voltas, HDFC Bank, Reliance, etc.