F&O Manual | Nifty holds strong at 19,500, support is at 19,460

The Indian equity benchmarks opened with gains on October 5, after two straight days of fall, with the Nifty trading above 19,500, as a fall in crude prices and a dip in US bond yields lifted sentiment.

The triple whammy of spiking dollar, US bond yields and crude was slowly easing, paving the way for a recovery in markets, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

The decline in the dollar and the US bond yields, however, was mild and not enough for a reversal of FII selling, which continued to be very high, he said. But, the sharp correction in Brent crude to $86 is a big positive. Apart from the macro benefits, the crude correction will reflect positively on the stocks of oil consuming industries like paints, aviation and tyres, he said.

“Sustained FII selling has impacted banking stocks in spite of their sound fundamentals. The second quarter results of banks will be good and their valuations are attractive. This presents a good buying opportunity now,” Vijayakumar said.

Capital goods stocks would continue to do well. The second quarter results of autos, too, would be good, gaining from soft commodity prices, he said, adding the market would start discounting this in advance.

Options data suggests heavy put writing at 19,450 and 19,500 strike.

“The Nifty closed below the 50-day Exponential Moving Average (DEMA) of 19,560 yesterday. The Foreign Portfolio Investors’ (FPIs) Long-Short Ratio fell to 27.88 percent on 29 September, indicating that the FPIs hold heavy short positions compared to long positions in the index futures,” Samco Securities said.

The Nifty has intraday support at around 19,460, which also acted as a support last week. Both call and put writers are battling it out at the 19,550 strike, it said.

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Among individual stocks, Marico and PNB saw a bearish buildup, while IEX and Infosys saw a bullish setup.

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