Religare Broking Recommends 4 Stocks for October Series: GNFC, Glenmark, NTPC, Asian Paints

Religare Broking has identified four stocks as top picks for the October series, offering insights into why these stocks are expected to outperform in the upcoming month. These selections come in the wake of market volatility experienced in September due to various economic factors.

Market Overview:
The domestic market saw volatility in September driven by concerns over higher interest rates, foreign capital outflows, and a global economic slowdown. Despite this, the Nifty 50 managed to close the month with a 2% gain, while the Sensex rose by 1.5%. September also witnessed a 3.7% jump in the BSE Midcap index and a 1% rise in the BSE Smallcap index. However, market participants remained cautious due to prevailing uncertainties.

Derivatives Insights:
In its derivatives, monthly rollover report, Religare Broking highlighted several sector-specific observations. The report noted that banking, chemicals, media, and textiles recorded the highest rollovers at 95% for the September series. In contrast, metals, oil and gas, and telecom sectors witnessed the lowest rollovers at 90%. The report also mentioned that the VIX (Volatility Index) was at around 12.5%, implying potential for a 690-point swing in the Nifty over the next 30 days.

October Futures Analysis:
The Nifty October Futures contract started with open interest of around 97 lakh, slightly lower than September. Bank Nifty October futures showed an open interest of approximately 22 lakh, down from 23.6 lakh in September. Nifty futures rolled over at 76%, lower than the previous series, indicating some unwinding of positions in the index.

Religare Broking’s Stock Picks for October:
The brokerage recommended the following stocks as top picks for the October series:

1. GNFC (Current Market Price: ₹602):
   • GNFC experienced a marginal loss in the September series but saw a substantial addition to open interest (OI) at 27%.
   • Rollovers for GNFC stood at a healthy 97%.
   • The stock is expected to move upwards due to robust cash-based buying, with a suggested positive stance and a stop at ₹570.
     
2. Glenmark (Current Market Price: ₹790):
   • Glenmark recorded a marginal gain in the September series with an OI addition of 56%.
   • The stock exhibited strong delivery-based buying in the last session of the series.
   • It is anticipated to attract fresh buyers, and Religare Broking recommends a positive stance with strong support at ₹760.
     
3. NTPC (Current Market Price: ₹245):
   • NTPC witnessed fresh long buildup, adding 46% OI while experiencing an 8% price rise in the last series.
   • The stock is believed to continue its upward trend with good delivery buying in equities.
   • The recommended approach is to remain positive on NTPC with ₹240 as a support level.
     
4. Asian Paints (Current Market Price: ₹3,160):
   • Asian Paints saw the creation of fresh short positions in the previous series, resulting in a 47% increase in OI, which are likely short positions.
   • Cash data indicates selling near ₹3,200 levels.
   • The stock is expected to correct towards ₹3,050 levels.

October Outlook:
Religare Broking’s outlook for October indicates a short roll in the October series. The average price of around 19,800 serves as a pivot for the month, and as long as Nifty trades below this level, a “sell on rise” mode may prevail. Strong support is expected at 19,300-19,350 levels for the October series, with a potential trading range of 20,000-19,300 for the first half of October.

Foreign institutional investors (FIIs) have sold around ₹25,000 crore in the cash market during September. The FIIs’ long ratio stands at 30% compared to 50% previously in index futures, indicating more hedged short positions in the October series.

Religare Broking believes that the fast-moving consumer goods (FMCG) and chemical sectors have the potential to outperform the index in the October series. A cautious approach is recommended, focusing on risk management and stock-specific opportunities.

Expert’s Perspective:
Ajit Mishra, SVP – Technical Research at Religare Broking Ltd., commented on the Nifty’s performance, emphasizing that the index should remain bearish until it crosses 19,750. He expects a test of the 19,200-19,450 zone soon, with a potential recovery if Nifty decisively breaks above 19,800. Mishra highlighted mixed trends across sectors and encouraged participants to adopt a stock-specific approach while managing risks.