F&O News: Sector Rotation Lifts Markets as RIL and SBI Shares Fuel Recovery Despite HDFC Slip, Says SBI Securities’ Sudeep Shah

India’s key equity indices ended the week positively. Gains in Reliance Industries (RIL) and State Bank of India (SBI) helped the market recover from the day’s lows to end almost flat on Friday, even though HDFC Bank lagged.

Analysts remain optimistic despite markets being at record highs.

Interview Highlights with Sudeep Shah, Deputy VP and Head of Technical & Derivatives Research, SBI Securities:

Indices at All-Time Highs: Opportunities for Traders

In recent sessions, sector rotation has been vital in keeping the market up. Sectors like IT, Pharma, Railways, Defense, Private Banks, and Oil & Gas have contributed to this momentum. Given this, using trailing stop losses instead of fixed targets is more practical now.

For the second week in a row, Nifty has closed positively, forming a bullish weekly candle. Indicators suggest continued strength. Support has shifted to 24050-24000, and as long as Nifty stays above 24000, it could reach 24600 or even 24850 soon. If it falls below 24000, the next support is 23800-23750.

For Bank Nifty, moving above 53400 could push it to 54000 or 54500 in the short term. The support zone is 52000-51900.

How Should Traders Approach This Market?

Following the trend is key. With a positive outlook, traders should consider buying dips in Nifty and Bank Nifty, focusing on strong sectors with proper risk management.

Options Data Insights for Nifty & Bank Nifty

For Nifty, there’s significant call open interest at 24400 and 24500. The put side shows interest at 24300 and 24200. The expected range for the next sessions is 24600-24080.

For Bank Nifty, call open interest is notable at 53000, with put interest at 52500. The anticipated range is 53300-51900.

Shifts in Sector Focus

Bank Nifty has consolidated over the last 8 trading sessions. Now, the focus is on IT, Pharma, Oil & Gas, Defense, and Railways, expected to continue their strong performance next week.

Foreign Institutional Investors (FIIs) and HDFC Bank

HDFC Bank’s latest FII shareholding data shows a drop below 55%, which might increase its MSCI weight. This was a significant factor in the stock’s rise during the week. However, on Friday, the stock corrected after an update, wiping out weekly gains and closing low. The 1600-1590 range will act as strong support.

Sectors to Watch Ahead of the Budget

Railways and Defense sectors are experiencing strong bullish momentum and are likely to keep performing well. Pharma, IT, and Oil & Gas sectors are also expected to continue rising, while Nifty Metal may break out of its consolidation phase.

Stocks with Trading Potential

• ONGC: The stock has broken out of a downward trendline with high volume and formed a bullish candle. With RSI above 60, it is recommended to buy in the 289-287 range with a stop loss of Rs 279, targeting Rs 305 and Rs 315.
• LUPIN: The stock has broken out of a 20-week consolidation with strong volume and outperformed major indices. It’s trading at all-time highs with indicators showing strong bullish momentum. Buy in the 1770-1750 range with a stop loss of Rs 1690, targeting Rs 1870 and Rs 1950.