Buy NTPC, UltraTech, Colgate Palmolive; short Tata Consultancy Services: Amit Gupta

Amit Gupta, Head-Derivatives at ICICIdirect told CNBC-TV18, "NTPC's follow on public offer (FPO) came and the stock stuck up in a range of Rs 168-169 but if one observes the previous FPOs in NTPC, this time the fall was very limited and the delivery buying before that was also very encouraging. The FPO participation also was very good. So, whatever shorts were formed in NTPC Futures during this FPO, they are likely to be closed and one will see more short covering coming in the stock in the coming sessions of this particular series and towards expiry this maybe more in momentum. We have started buying the stock near Rs 168-169 and we are looking for a target of Rs 178 on the higher side. This is one stock that we are recommending to our clients."

"There is another good strategy for F&O traders, long UltraTech Cement and short Nifty because UltraTech has not performed in the last five or six months but if one sees the open interest position now, it has seen the reduction of almost 15 percent in the last two or three sessions and the volume setup is also very encouraging. We saw that near Rs 3,960-3,970 and then it closed above 4,000 and then the move in yesterday's session started."

"So we are long in UltraTech and simultaneously we are shorting Nifty because we believe this Nifty stock will outperform the index in the coming sessions and the cement space overall which was not performing because of UltraTech's move, those stocks will also start performing in the coming sessions. We are recommending this strategy as well to our clients."

"We are short in Tata Consultancy Services (TCS). If one looks at the last one month's performance in TCS despite weakness in Infosys it was not moving up because previous historical trends have been there whenever some weakness comes in Infosys. Generally, the cash flows were moving into TCS but that did not happen this time. I think there was a distribution pattern near Rs 2,500 which was seen in the stock. In this particular series the highest call base was seen very close to the spot price of 2,500 Call option. So these Call writers have become aggressive in TCS, so more selling is possible in the coming sessions in the stock."

"So we are writing 2,500 Call option only because the volatility increased in the last week or so. We are utilising that and the premium of Rs 40-45 - we will take to short 2,500 Call option of TCS for this series."

Related stories

Amit Gupta

Head of Derivative|ICICIdirect

• 
  Bank Nifty/Nifty price ratio remains firm above 2-year high of 2.54
• 
  Nifty likely to head towards 11,900 this week; support placed at 11,550
• 
  Nifty just 3% away from record highs; Bank Nifty could see profit booking

"On the buy side certain stocks which are coming out of the range, I will prefer, which remained range bound for a pretty longer period for example Colgate Palmolive (India), after the last quarterly results the stock had some subdued sessions but it had a breakout above Rs 1,030-1,040. It recovered from there and now it is close to Rs 1,100 levels. My sense is it is moving towards Rs 1,160 in the coming sessions. So the decline in today's session towards Rs 1,090 or Rs 1,100 should be utilised to buy the stock with a certain stop loss and look for a target of Rs 1,160 in the coming sessions," he added.