Rahul Sharma from JM Financial Services suggested that investing in monthly put options on the Nifty index could be advantageous, with the potential for these options to double or even triple in value from their current levels. The Nifty index has been experiencing its third consecutive day of decline, dropping approximately 200 points. According to Sharma, the index could soon break the previous low of 24,700 recorded on October 7, with more significant support expected around the 24,500 to 25,400 range. He anticipates further market volatility in the coming weeks, possibly driving the Nifty down to 24,400. Purchasing 24,500 put options, priced between 108 and 110, could serve as a hedge against long positions or provide short market exposure.
Regarding the auto index, Sharma noted that it has recently underperformed, breaking through the lows seen on October 7. He predicts the index may decline towards 24,500, indicating a 2% further drop. Among auto stocks, Tata Motors has faced pressure, particularly in the past month, showing signs of capitulation below 900. Maruti is also of interest, as it approaches its 200-day exponential moving average. A breach below 12,000 could indicate further weakness.
On the realty index, Sharma acknowledged that it has recently outperformed the auto index but faced a notable decline today, with a 3.5% drop, surpassing the auto sector as the top intraday loser. Despite this setback, real estate stocks maintain a relatively stronger macro structure. He believes these stocks will likely rebound more quickly once the broader market, including the Nifty, stabilizes. Overall, Sharma views the realty sector more favorably compared to other sectoral indices.