Stocks to buy for short-term: Jay Thakkar of ICICI Securities suggests these three shares to buy in F&O segment

Stock Market News: The major domestic indices, Nifty 50 and Sensex, showed little movement on Wednesday as rising energy stocks, led by ONGC and oil marketing firms due to a better earnings forecast, countered a decline in consumer shares. However, the indices ultimately was trading flat to negative.

As of 13:45 IST, the Nifty 50 was flat at 23,734.55, while the Sensex dipped 0.23% to 78,409.90. Both the Nifty 50 and Sensex posted increases of 1.6% and 1.8%, respectively, on Tuesday, marking their strongest performance in a month and pushing them into positive territory so far in 2025.

As per the ICICI Direct Research report, the Nifty 50 demonstrated notable strength against the persistent selling pressure from FIIs, bouncing back nearly 3% from its lows to finish the week just below 23,500 levels.

The Union Budget and the monthly derivatives expiry did not lead to any substantial volatility in the primary index, as major stocks remained relatively stable. However, there was considerable volatility in the broader markets, and even though the mid and small-cap indices posted slight gains, consumption stocks emerged as the primary gainers.

Looking ahead, analysts suggest that maintaining levels above 23,600 should facilitate the current upward trend in the market towards 24,200 levels.

Market Outlook by Jay Thakkar, Vice President & Head of Derivatives and Quant Research, ICICI Securities

Nifty 50

Nifty 50 has taken off its previous swing high of 23,632 in the last trading session indicating trend continuation on the upside in the short term. The Index has been witnessing short covering which is confirmed with the couple of indicators like FII Index positions, Options data as well as India VIX. The Net Index long of FIIs now stands at 16.76% which is still oversold, hence there is further short covering expected from them.

The PCR has sharply moved above 1 and its now at 1.13 i.e. bullish. There was call unwinding seen 23,300 to 23,700 strikes and although there is highest call OI at 24,000 strike, still there was some call unwinding seen in that particular strike which and this has helped the PCR to move beyond 1. The highest put OI is at 23,000 strike, however, the next put base is at 23,500, hence in the near term the short term range is 23,500 to 24,000 levels, so this makes a risk: reward better for the longs in the near term.

The Index is trading well above its max pain and modified max pain levels of 23,600 and 23,640 levels respectively and that is positive in the near term. The Index is also trading well above its 30 day VWAP of 23,500 which coincides with the put base at 23,500, so 23,500 is a key reversal level on the lower side, hence a major support.

The India VIX has fallen from 19 to 14 levels which is a significant drop as there was no negative surprise from the Budget. The IVs of Nifty 50 has fallen to 13.11 levels from its recent 52 week high of 30.71 so there is a drop of 60% from the peak. The IVP and IVR had shot up quite much and had reached to the upper most levels, hence there was quite a higher chance of IVs cooling off in the near term which makes a case for short covering leading to a bounce in the Index. So based on these observations, the short-term target for the Index is 24,000 levels until 23,500 levels are held on a closing basis.

Stocks To Buy in the near-term – Jay Thakkar

Buy NTPC Future at CMP: ₹323; Stop Loss: ₹310; Targets: ₹338 and ₹345

NTPC didn’t make a new low despite Nifty 50 forming the fresh swing low indicating outperformance of the stock. The stock had witnessed short built up in the last decline due to which there was sharp correction and now the stock has witnessed decrease in OI by almost 20% , however, the price reaction is still not much which makes a room for a stock to perform in the near term.

The stock looks too oversold from its PCR which is at 0.40, the stock has a put base at 300 which is the recent swing low. It has witnessed good put additions from 300 strike to 325 strike whereas call unwinding from 310 to 330 strikes which makes a possibility of an upside. The stock is just trading at its 30-day VWAP at 322, so above these levels if it sustains then it will lead to a short-term upward breakout. It is trading above its max pain level of 320 which is also bullish in the near term.

Buy Reliance Futures at CMP: ₹1,290; Stop Loss: ₹1,240; Targets: ₹1,340 and ₹1,380

Reliance Inds has also witnessed huge shorts built up and the OI had reached to its life time highs and the price had corrected approximately 1600 levels to 1200 levels approximately i.e. down by 25% thus underperforming the Nifty. Now, the Index has managed to form a base near 1200 levels as it didn’t make a fresh low despite Nifty making it in January series clearly showing strength, however, the Index has bounced back quite sharply after making lows of 22786 and wrt that Reliance is yet to catch up the upward rally.

Since, it is a high beta stock having good weightage in the Index and the short are getting covered as the OI has fallen by 25% from the peak with price slowly moving higher. So, from hereon, the price is expected to catch up the upward momentum once 1300 levels are taken off as 1300 strike has the highest call base. The stock is trading well above its max pain level of 1270 which is positive and it is also trading well above its 30 day VWAP of 1256, hence the upward probability is quite high mainly due to short covering.

Buy Gujarat Narmada Valley Fertilizers & Chemicals Futures (GNFC Futures) at CMP: ₹583.70; Stop Loss: ₹561; Target: ₹610 and ₹625

The stock has seen good consolidation and it has reached to the lower end of the range, hence the risk: reward ratio is positive. The stock had corrected mainly due to long unwinding and now since the base seems to have formed the probability of a bounce back is quite high. There has been an improvement in PCR with aggressive put additions at the lower levels and now there is no major call OI before 600 levels, hence the minimum target comes to 600 which when taken off will lead to further upward move.

The strike 580 and 590 have seen call unwinding as well and simultaneously there has been put additions from strike 560 until 580, indicating that the bulls have an upper hand. The stock is comfortably trading above its max pain and modified max pain levels of 560 and 558 respectively, thus these levels will act as a crucial support going forward.

Disclaimer: The Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 04/02/2025 or have no other financial interest and do not have any material conflict of interest.

The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.