Published on 12/08/2020 11:24:15 AM | Source: ICICI Direct

Quant Pick – Buy Wipro Ltd For Target Rs. 335 - ICICI Direct

Posted in Broking Firm Views - Short Term Report| #Wipro Ltd #IT Sector #Trading Report #ICICI Direct

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Derivatives and Quantitative Outlook…

* In the current market scenario, where the broader market is significantly outperforming, traction seems to be coming in technology stocks as the banking space has failed to witness any major recovery. Along with technology heavyweights like TCS and Infosys, stocks like Wipro have also been moving into new territories. We believe that fresh accumulation is likely to be seen in the stock in the coming sessions

* The open interest in Wipro has been increasing gradually along with the price movement prior to the quarterly results as the stock has been witnessing pressure around | 230 levels. However, post results, a sharp closure of positions was seen in the stock along with a fresh move towards | 290. The current OI in the stock is significantly low. We expect fresh OI addition to be seen in the coming weeks, which should take the stock towards new highs

* In the options space, the stock had the highest Call OI base at the 290 strike in the July series. The same OI has been rolled into August series as well. However, initial signs of closure are visible in these options and OI is moving into deep OTM 320 Call strike. At the same time, noteworthy Put addition is visible at the 280 strike suggesting expectations of limited downsides

* Wipro witnessed life-time high volumes on July 15, 2020 post its quarterly results when it surpassed its major resistance of | 230 levels and moved to | 270 in a single session. The intermediate profit booking took the stock towards | 255 levels. We do not expect it to retest these levels in the near term. Hence, we recommend buying with a stop loss placed around it

* Wipro has shown the tendency of finding sharp directional moves after surpassing its long term mean levels in the recent past. Currently, long term mean for the stock is placed around | 250. As it was able to sustain above it, we expect the ongoing momentum may take the stock higher towards | 330, which is the mean+2*sigma for it


Buy Wipro in the range of Rs. 275-282, Target: Rs. 335; Stop Loss: Rs. 251; Time frame: Three months


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