August F&O series: HDFC Bank, Vedanta, Trent, Polycab among stocks to watch

The August futures & options (F&O) series is expected to be action-packed, driven by the ongoing earnings season. The bullish  momentum may persist, with the Nifty likely settling with 1 per cent gain, Nuvama said in its latest note.
 
At the sector level, the brokerge felt that banking and IT may underperform, with the exception of HDFC Bank Ltd, which should see some interest due to the MSCI update on weightages on August 13. The brokerage said there is notable interest in HDFC Bank at around Rs 1,550-1,600 levels.

"Considering seasonality, Industrials like Polycab, Havells, ABB and Crompton Greaves should be viewed with a long bias.  Additionally, Trent, a probable Nifty 50 inclusion, is expected to perform well in the August series (strong Aug seasonality). Within metals, Vedanta has a strong support around Rs 430 level and that should be used as an entry level for 6 per cent target and 2 per cent stop loss," Nuvama said.
 
Selective auto names should also be looked at from short term long idea such as Ashok Leyland and Maruti Suzuki India Ltd, it said.

Nifty futures rollovers stood at 70 per cent against an average of 71 per cent in the last three series. Alongside, Nifty futures will start the August series at lower open interest (OI) base of  Rs 33,600 crore (1.38 crore shares) against OI of Rs 36,400 crore (1.51 crore shares) seen at the start of July series.

On the expiry day, the roll cost for Nifty  was at around 56 basis points, which has come off from previous day’s 66 bps. Market-wide futures open interest at the start of August series stood at Rs 4.508 lakh crore (historic highs) as compared with Rs 4.321 lakh crore at the start of July series.

The market-wide rollovers stood at 89 per cent, higher than the 3-month average of 88 per cent. Stock futures rollovers stood at 93 per cent, at par with average rollovers of last three series at 93 per cent.

"Most frontline names saw their roll  cost hovering around 63-65 bps with average decrease in roll cost across names being 1-2 bps DoD," Nuvama said.