Amit Gupta, Head- Derivatives at ICICIdirect told CNBC-TV18, "In Nifty, the consolidation is expected to continue for a while but eventually the move is on the higher side. So, we should keep on looking at certain stocks where the Call options can still be bought because the risk is a little lower when you start buying the Call options and those stocks which have started coming up from the consolidation."
"So, one of them we are picking is Asian Paints because almost 45 percent of short closers in the last two or three series has been seen. In fact when I compare with the last series, it has started this series with 20 percent lower open interest and the majority of the positions were on the short side. So, that is how this short covering pattern is panning out in this. We saw that this series started from Rs 1,105 and good delivery pickup from those levels and now 1,100 Put option has the highest Put base. When it was consolidating below Rs 1,100, 1,160 Call writers were very active in this in the last couple of series and now those Call options positions are getting closed. That is why I recommend buying 1,160 Call option only where IVs are still very low and it is expected to move towards Rs 1,230. In that case the 1,160 Call option premiums can surge. So, you buy this particular Call option for the May series," he said.
"Another Call option that we are buying is Voltas because in March we had seen a good breakout just towards the expiry of March and then almost for the last one month it consolidated within Rs 405 and Rs 420. Within this range, the historical volatility has declined very sharply. That shows the accumulation pattern in the stock and that can be seen in the future segment also where almost from 5 million shares in the open interest has moved to 7 million shares. So, I think these long positions have started building up in the stock. It can move towards this May expiry, so, if somebody can buy the 420-430 Call option, I think they can be the winner in this."
"Textile stocks off late, like Indo Count started performing better, we saw that Arvind which consolidated for a pretty long period, from 2014 to 2016, almost for two years is finding a lot of resistance near Rs 360 levels. So, once this level is taken out in this particular move, we saw the last month Rs 385-410 was the range for Arvind precisely and now the open interest positions are still very low and it is heading towards the expiry. When I compare with the last year open interest, still the leverage in Arvind is almost 22-24 percent lower. So, I think still there is enough headroom in this particular stock where the fresh long positions can come in and the stock can start moving higher. So, looking at this consolidation base, I think on the higher side Rs 445-455 kind of levels can be hit in the coming weeks," he added.
"Another one is Motherson Sumi because from the auto ancillary space, we saw that this particular stock which was more focused on the outside part of India and it remained laggard for pretty long period, but now if you see the positions in futures, we have seen a 45 percent cut in the last one month and now it has approached the life highs of Rs 395-400 levels. The highest Put base now is forming near Rs 400, so, not much downside is expected. In the last month, we saw almost two month high volumes near Rs 380 levels. So that remains a very crucial support now for Motherson Sumi. Whenever we have seen such a high volume pickup, the stock has not gone below that. The same happened near Rs 350-355. So, one should look at buying this stock. We are looking for a target of Rs 445," he added.
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