Why Sudeep Shah is bullish on BPCL from OMC pack?

“The real problem is 22,500 call writers, so there we are not seeing any unwinding. So, the moment Nifty crosses 22,520 that would lead to those call writers to unwind their positions and then we would see a continuation of the up move up to 22,700,” says Sudeep Shah, SBI Securities.

What is your thought on the market, today a bit of a range-bound move is what we could say at least for the market though right now managing to hold on to some bit of a green, what is your thought on the benchmark indices as well as how could one be reading the run-up that we have again started seeing in the mid and smallcap?

See, what we are seeing is in the last few days it is a complete midcap and smallcap led show and that is the reason Nifty stocks are in a range now and also in the last three-four days any dip to 22,300 has been bought.

So, I feel overall the 22,300-22,350 zone will act as a strong support. If we even add the derivative data to this, then there is strong put writing happening in 22,300-22,400 strikes, so that means that this zone is a safe support zone 22,300-22,350 on the upside now.

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The real problem is 22,500 call writers, so there we are not seeing any unwinding. So, the moment Nifty crosses 22,520 that would lead to those call writers to unwind their positions and then we would see a continuation of the up move up to 22,700.

So, for me 22,300-22,350 zone is a strong support. 22,520 is the resistance level which needs to cross but between that as and when that happens during that time period what we feel is that it is going to be an individual stock picking show that is going to carry on and on a day-to-day basis we are seeing different sectors coming up so that shows a healthy market breadth and overall I feel even from a midcap and a smallcap standpoint, midcap indices are looking stronger than the smallcap counterpart now. We feel there is better relative strength over there and we prefer picking certain midcaps ahead of smallcap stocks.

Let us talk about a couple of names today that have been buzzing whether you look at something like Cochin Shipyard, Garden Reach or even Mazagon Dock we have seen a sharp run-up coming in in these stocks. What is the view on this one if you could read the charts and tell us how are they looking like, is it still something that one should look to enter in any of these names?

Absolutely, see between Cochin Shipyard, Garden Reach and the other third stock that you have just mentioned, I feel GRSE and Cochin Shipyard look much better on chart and there is a consolidation breakout happening in both the stocks.

GRSE was in consolidation since the last two and a half to three months and today we have seen a breakout with volumes on the upside, so overall from here on for GRSE 840, 835 zone will act as a strong support and till the time this zone is held we feel that this current momentum in the defence names would take the stock up to 930, 950 on the upside.

And for Cochin Shipyard, it is at a fresh life high, so the entire consolidation between January to March has been taken out a couple of days back backed by strong volumes and higher delivery markings also and in the last three sessions we have seen higher top higher bottom formation also on the daily chart.

So, I feel this renewed momentum in this entire space. If you see the charts here on Cochin Shipyard looks like headed up to 1180, 1230 on the upside and on the downside 980 zone now will act as a safe support.

What is your view on OMCs on the charts?

If you see HPCL, BPCL and ONGC, specifically HPCL right from the time in late February when the crude prices started rebounding from $79-80, HPCL has seen negative momentum on the charts. 560, 550 zones were acting as a resistance and right now the stock is already around 480. So much of the crude price rise is already in the stock price of the charts in HPCL.

But comparatively if you see BPCL looks stronger. BPCL has not fallen much from its life highs of 660. So relative strength is there in BPCL. It is much better and it is even trading above its short-term moving averages.

So, overall if I have to choose between HPCL and BPCL, BPCL would be my preferred pick and 595, 590 zone will act as a support here and the stock could head up to 635, 640 where there could be some resistance.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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