Tracing weak global markets, Nifty opened the day on a weak note and most importantly below the crucial 5200 mark. Though an immediate bounce back ensued in the afternoon, Nifty found itself trading near the day’s lows.

However, the final session saw a phoenix-like recovery as the index managed to scrape to parity and then rose above 5225 levels to sign off the session up 0.65% at 5243.

The put-call ratio has been confined between the 1.20 and 1.26 levels in the past nine trading sessions with a steady increase in open interest. We feel that this is an exercise in base formation and a further up move will follow. Another very interesting highlight is the tight spread of the maximum call and put-open interest in Nifty strikes. With a range of just 100-200 points, Nifty seems to be on the verge of a candid breakout. Considering that the implied volatilities (IVs) are trading at the lower band, traders could initiate long straddles/strangles at opportune levels.

The cement and power pack are two sectors which, we feel, will outperform the index on a short-term basis. The cement pack saw early reversal signs and from there on there has been a one-track upside move. We like ACC with a target of Rs 1,000 and Ultracemco with Rs 1,100. Power seems to be garnering a lot of interest in the past few sessions and seems upbeat for a further assault.

An 18% fall in open interest driven primarily by short-covering makes REC our top pick closely followed by CESC. Another stock which holds our attention is FSL. The stock has seen a strong breakout from its trading range and could well reach the Rs 42 levels in the coming few trading sessions.