The Indian stock market is likely to open lower and remain volatile on Thursday amid mixed global cues after the US Federal Reserve raised interest rates by 25 basis points to curb inflation.
In the previous session, benchmark indices rebounded, with the Nifty 50 closing above 23,200.
According to Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities, the Nifty 50 held its recent lows and witnessed significant put additions, pushing the weekly PCR back to 1.10 and improving the near-term outlook.
The immediate trading range for the Nifty 50 is 23,000-23,500, with strong support at 23,000. The India VIX declined 2% to 13.15, offering some relief to short-term traders. However, unless the VIX falls below 12, a rebound towards 15-16 cannot be ruled out.
For the September series, 23,000 remains a crucial support level. A sustained break below it could increase the risk of a retest of the March lows, he said.
Thakkar expects the near-term Nifty range to remain between 23,000 and 24,000 as long as 23,000 holds on a closing basis. A break below 23,000 could trigger further weakness towards the March lows.
Bank Nifty Outlook
Bank Nifty held above 56,000, where strong put support is visible. However, call writing between 57,000 and 58,500 is likely to keep the index range-bound.
FII index short positions have risen to a net 2.91 lakh contracts, an extremely stretched reading that could trigger short covering. Given these elevated short positions, initiating fresh index shorts may offer an unfavourable risk-reward setup.
Stocks To Buy Or Sell Today
Jay Thakkar has recommended two stocks to buy today and one stock to sell. He suggests buying ITC and Blue Star shares, while selling Bharat Heavy Electricals (BHEL) stock futures.
ITC | Buy | Target Price: Rs 278-285 | Stop Loss: Below Rs 255
ITC has outperformed the broader market and the Nifty FMCG index in recent sessions. Significant short additions during the recent decline leave room for short covering.
Strong put additions are visible between Rs 250 and Rs 270, while Rs 270 has the highest call base. A break above Rs 270 could trigger call unwinding and further upside. The stock's max pain is at Rs 265, Thakkar said.
He recommends buying ITC stock futures in the range of Rs 262-267, for a target price of Rs 278-285, while maintaining a stop loss below Rs 255.
ALSO READ: Stock Market Today: All You Need To Know Before Going Into Trade On Sept 17
BHEL | Sell | Target Price: Rs 395-388 | Stop Loss: Above Rs 425
BHEL share price has broken its sequence of higher highs and higher lows, indicating a potential trend reversal. Continued long unwinding also points to weak buying interest.
According to Thakkar, heavy call additions at Rs 410, Rs 420 and Rs 430, along with put unwinding at Rs 420 and Rs 430, have pushed the PCR to 0.53, signalling weakness. The stock is also trading below its Rs 420 max pain level.
He suggests selling BHEL stock futures in the range of Rs 410-415 for target of Rs 395 and Rs 388, while keeping a stop loss above Rs 425 level.
Blue Star | Buy | Target Price: Rs 1,570-1,620 | Stop Loss: Below Rs 1,460
Blue Star share price has held its recent lows despite rising open interest, indicating short buildup. However, the stock is forming a base around Rs 1,480-1,500, suggesting potential selling exhaustion.
The Rs 1,500 strike has the highest call base, while strong put additions are visible between Rs 1,460 and Rs 1,500. A sustained move above Rs 1,500 could trigger short covering, offering a favourable risk-reward setup, Thakkar said.
He suggests buying Blue Star shares in the range of Rs 1,500-1,510 with targets of Rs1,570-1,620, and keeping a stop loss below Rs 1,460.
ALSO READ: Catch Stock Market Live Updates Here
Disclaimer: The views and opinions expressed by the investment advisers on NDTV Profit are of their own and not of NDTV Profit. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.