Nifty futures, whose premium slid to under 10 points on Monday, rose significantly during the day to over 30 points, reflecting optimism in the markets.
Buying was across the board with ITC , HDFC , Bharti , Infosys and TCS contributing to the gains. The Indian Volatility Index (VIX) had shown signs of bottoming out, indicating a likely rise in volatility in the near term.
Build-ups in technology stocks were strong ahead of the Infosys results on Friday. Any positive surprise may result in strong up-move in these stocks. Going forward, if there are no negative surprises, we believe Nifty might test its recent highs of 5950-6000 where it can face short-term resistance.
Call writing at 6000 is significant. Any closing above this level could trigger short covering in the form of long build-ups, taking Nifty to higher levels. The downside level to watch out for would be 5750-5800 as it was in this range that the premium in Nifty futures started improving. Sectors like infrastructure and real estate are witnessing long build-ups, indicating fresh moves upside. Even the banking sector, after a phase of consolidation, is likely to trade with a positive bias.
Strategy : Buy Nifty 5900 Call and Sell 6100 Call both for the April series for 100 and 25, respectively; sell May 5500 Put for 40. This would mean that the costing for the strategy would be 35 and maximum profit would be 165.
This is with a view that Nifty would remain positive heading towards the 6100 mark this expiry. We have sold 5500 Put, as 5750 is likely to act as a strong support.
Stock Ideas: Buy OnMobile Comm with a stop-loss of 260 and target of 300. Buy Patel Engineering with a stop-loss of 172 and target of 200.
Buy DLF with a stop-loss of 245 and target of 275.
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