Synopsis: The August futures and options (F&O) series is anticipated to be highly dynamic, influenced significantly by the ongoing earnings season. Nuvama suggests that the Nifty index is likely to experience a bullish trend, with an estimated 1% gain.
As we approach the August F&O series, market analysts, including Nuvama, predict a highly engaging period driven by the current earnings season. The industrial sector, featuring companies like Polycab, Havells, ABB, and Crompton Greaves, is advised to be viewed with a long-term investment bias.
Additionally, Trent, a potential candidate for Nifty 50 inclusion, is expected to perform well due to strong seasonality patterns in August.
Market Outlook:
Nuvama's latest report highlights that the Nifty index may settle with a 1% gain in the August series, indicating continued bullish momentum. This optimism is partly driven by notable interest in HDFC Bank, especially in light of the upcoming MSCI update on weightages on August 13. The bank's stock is expected to find significant support around the ₹1,550-1,600 levels.
Sector Performance:
The brokerage firm anticipates underperformance in the banking and IT sectors, with the exception of HDFC Bank. Meanwhile, in the industrial sector, stocks like Polycab, Havells, ABB, and Crompton Greaves are recommended for long-term positions. Furthermore, Trent's potential inclusion in the Nifty 50 could spur its performance in the upcoming series.
Metals and Auto Sector:
Within the metals sector, Vedanta is highlighted for its strong support around the ₹430 level, making it a strategic entry point for investors aiming for a 6% target and a 2% stop loss. In the auto sector, selective stocks such as Ashok Leyland and Maruti Suzuki India Ltd are suggested as short-term long investment ideas.
Futures and Rollovers:
Nifty futures rollovers are at 70%, slightly below the average of 71% over the last three series. The August series begins with a lower open interest (OI) base of ₹33,600 crore compared to ₹36,400 crore at the start of the July series. Market-wide futures open interest has reached historic highs of ₹4.508 lakh crore, up from ₹4.321 lakh crore at the start of the previous series. Stock futures rollovers stood at 93%, consistent with the average of the last three series.
In conclusion, the August F&O series is set to be action-packed, with significant movements expected in various sectors. Investors are advised to maintain a long bias on industrial stocks and keep an eye on HDFC Bank due to the MSCI update. Metals and auto sectors also present promising opportunities for strategic investments. As always, it is crucial to consult with a financial advisor before making any investment decisions.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
