KPIT Technologies CEO Suggests 3 Stocks for Short-Term Trades in Derivatives Market

Indian Stock Market Sees Muted Start Amid Global Uncertainty

The Indian stock market is expected to have a subdued opening on Thursday, 13 May, with the GIFT Nifty trading at 23,431, a 6.3-point premium over the previous close of Nifty futures at 23,424.70. The muted start comes as equity benchmark indices declined for the fourth straight session on Tuesday, with the Sensex and Nifty 50 dropping nearly 2% due to rising crude oil prices and uncertainty over the West Asia conflict.

The sell-off was further exacerbated by continuous outflows of foreign funds and the rupee falling to an all-time low. As a result, the 30-share BSE Sensex plummeted by 1,456.04 points, or 1.92%, closing at 74,559.24. The market's broad sell-off was marked by a significant decline in investor confidence, with the Sensex falling by as much as 1,565.78 points, or 2%, at one point during the day.

Market Outlook

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According to Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities, the Nifty 50 has closed significantly below the 23,800 level, indicating a negative overall momentum. Thakkar observes that the weekly expiry has closed at its day's low, suggesting that the short-term trend is negative, with foreign institutional investors (FIIs) increasing their short positions from 1.75 lakh contracts to 2.20 lakh contracts by Monday's close.

Thakkar notes that the options suggest that the 24,000 level is an immediate hurdle, with the highest call base, and that the bears have the upper hand until this level is taken off. On the lower side, the 23,000 levels have the highest Open Interest (OI) on an immediate basis, which may act as a support.

Stock Recommendations

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Based on the market analysis, Jay Thakkar recommends the following stocks for the near-term:

• KPIT Technologies Futures: Sell in the range of ₹700-690, with a stop loss above ₹720, and targets ₹665-645. KPIT has been trading weakly, forming lower highs and lower lows with increasing OI in the futures segment, indicating overall short positions in the stock.
• Max Healthcare Institute Futures: Buy in the range of ₹1,010-1,020, with a stop loss below ₹970, and targets ₹1,080-1,120. The stock has bounced back from recent lows, with a decrease in OI in the futures segment, indicating that the recent bounce is due to short covering.
• Eternal Futures: Sell in the range of ₹238-242, with a stop loss of ₹250, and targets ₹225-215. Eternal had witnessed a bounce back on account of short covering, and now, with the price reversing again from the recent highs, the OI has increased, signalling a short build-up.