Markets saw movements yesterday which tested both the highs of 7750 & the lows of 7500 before closing almost unchanged. The budget has pleased most however will the promises turn into implementation is the big question.
Global cues have again turned volatile & suggest that we should see more time in this consolidation on the Nifty with 7450-7750 being the range.
Rupee, oil, bond yields & global cues will dictate the trend in the short term.
For today we are suggesting going long on key beneficiaries of the budget mainly reality, & shorting the high beta underperformers mainly gold & telecom stocks.
Trading calls for next 3 days:
Longs:
1. Buy DLF: Rs 222, stop loss Rs 216, target Rs 234
2. Buy Sobha Developers: Rs 470, stop loss Rs 460, target Rs 490
Shorts:
1. Sell Reliance Communications: Rs127, stop loss Rs132, target Rs112
2. Sell Titan Company: Rs 327, stop loss Rs 334, target Rs 310
The option we had initiated on short strangle gave excellent returns yesterday of around 36% if you bought back both the Nifty 7700 call @ Rs 45 & the 7500 put@ Rs 90 for Rs 135
WE recommend that you do cover & book profit around those levels as premiums have contracted.
Option strategy:
1. Buy Infosys 3200 put @ Rs 72, stop loss Rs 42, target Rs 122
2. Buy ITC 325 put @ Rs 7, stop loss Rs 3, target Rs 25
3. Short strangle on Nifty:
Sell 7500 put @ Rs 96
Sell 7700 call @ Rs 117
Total Rs 213
Stop loss Rs 253
Look for contraction in premiums to buy around Rs 135
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