How to trade RIL, SBI, HDFC Bank, TCS in volatile market

ICICIdirect.com has come out with its report on heavyweights stocks like Reliance, SBI, HDFC Bank & TCS.

Reliance: Open interest in Reliance has increased by 24% with the stock moving from 770 to 860 levels suggesting accumulation of long positions. The fresh build up in Reliance in the October series started on a low base. We believe roll spread in the stock may remain in the range of 2-4 points till settlement. The stock has seen the maximum Call base at 860 followed by 840 strike, which is likely to be the major resistance in the coming sessions. 
 
SBI: SBI witnessed addition of 26% open interest when it fell from 1930 to 1720 levels. However, when the stock recovered towards 1930 again, it witnessed closure of 10% short positions leaving almost 16% shorts in the stock. We expect these shorts to be rolled to the November series and the roll spread may not widen beyond 4 points. However, the spread may reduce to sub 1 level if the stock moves below 1850.
 
HDFC Bank: Post September series, the stock observed selling pressure and plunged from 465 to 438 levels before it recovered back to 480 since the second week of October. However, no major change in open interest was seen during this volatile move. The previously rolled open interest from the September series had a long bias. We expect the same to be carried forward to the November series. The roll spread is likely to remain in the range of 1-2 points, which was seen near September settlement also. TCS: Post the announcement of Infosys results, TCS added 21% open interest with long bias and the stock also moved up by 9%. Recently the stock surpassed the major resistance of 1080 which was the 1-year trend line below which it broke down in the month of August. However the recent disappoint in Q2 results may lead to long liquidation in the stock and it may be dragged towards 1000 levels. In such a scenario, the roll spread may shrink. The stuck up long positions are likely to be rolled into next series. The roll spread has already shrunk to 1 point in this series from 3-4 points seen in the previous series. We believe the rollover of long positions in declining stock may not keep the roll spread on the higher side and it may not widen beyond 1 point. Non-Institutions holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

Read More