Roll spreads for single stocks have traded close to fair levels this month, reversing a trend of cheap futures basis over the last two months. From a technical standpoint, 11,300 is an important resistance level for Nifty.
The bears took control of D-Street on Wednesday and Thursday promises to be equally exciting as traders would roll over their positions from July series to August.
The market is likely to remain volatile on July 30, and traders will be better off remaining neutral and turn buyers on dips towards 10,950-10,850.
On Wednesday, the S&P BSE Sensex fell 421 points to 38,071 while the Nifty50 ended 97 points lower at 11,202.
Profit booking after the recent rally, the US Fed meeting, a rise in coronavirus cases and mixed earnings from India Inc capped the upside, experts say.
"The backdrop for this week's F&O expiry appears bullish, with the retail segment long single stock OI up 80,000 lots, offsetting long unwinding of 100,000 lots by FIIs this month,” S Hariharan, Head-Sales Trading, Emkay Global Financial Services, told Moneycontrol.
“Roll spreads for single stocks have traded close to fair levels this month, reversing a trend of cheap futures basis over the last two months. From a technical standpoint, 11,300 is an important resistance level on the Nifty,” he said.
Hariharan is of the view that the implementation of new margin guidelines for the cash segment will be a short-term dampener on market volumes, which have trended strongly for the last two months.
We have collated views of experts on what investors should do on July 30 when the market resumes trading:
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
On the daily chart, the Nifty has been showing strength to sustain the highs and has witnessed minimum downward correction in the last one month. Daily 14 period RSI is placed above 60 levels and is gradually turning up signaling strength in the upside momentum.
As per its formulation, one may expect upmove to resume from here or from slightly low levels in the next few sessions. The short-term trend for the Nifty is slightly negative.
But, the overall uptrend status of the market remains up and there is still no formation of a reversal pattern at the highs, as per the daily chart.There is a possibility of an upside bounce (from here or from the lows) and retesting of the overhead resistance of 11,350 in the next few sessions. On the downside, the area of 11,100-11,060 is likely to offer strong support for the market ahead.
Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities
The Nifty fell below 11,350 and closed at 11,200. Profit-taking in largecap and index heavyweights led to a massive fall in the markets. We often see profit-taking in the market before the US Fed meeting.
Below 11,149 levels, the Nifty can fall up to 11,050 or 10,900 levels. At the top, there will be major hurdles at 11,240 and 11,300 levels. It is better to buy only after a big decline between 10,950 and 10,850 levels.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.
In the case of Nifty, the resistance zone of 11350-11380 has proved to be a key hurdle zone. The index faced steep selling pressure as it attempted to approach that barrier. Consequently, the index formed a bearish outside bar on the daily chart.
The short-term momentum indicator is showing a negative divergence, which is a bearish sign. They suggest that weakness is creeping in. Structurally, the index is still in sideways mode within the range of 11050-11350. The Nifty will see a deeper correction once the lower end of the range breaks.
Ajit Mishra, VP - Research, Religare Broking Ltd
Markets traded volatile and settled with a cut of nearly a percent. After the initial uptick, the benchmark inched gradually lower as participants preferred to book some profit ahead of monthly expiry.
Markets will react to the outcome of Fed meet in the early trade on July 30. The scheduled derivatives expiry, combined with earnings, will keep the participants on their toes.
Indications are in the favour of further profit-taking, so we advise booking profits in existing longs and wait for clarity to return.
Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in
It is critical for the index to sustain above 11,149 levels as a breach of this on a closing basis may trigger a fresh bout of selling pressure.
For the time, it will be prudent on the part of traders to remain neutral whereas traders with a high-risk appetite, who like to have long side exposure, can do so with call options by placing a market stop below 11149 levels on a closing basis.Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities
The Nifty has rallied significantly in the current series and trades with gains of nearly 8 percent. Near-term support is seen at 10,980 levels, above which the trend continues to remain positive.
We expect some increase in volatility on account of the dollar index breaching its support. In our opinion, any meaningful correction would be a buying opportunity in quality frontline stocks. Banking has been an underperformer and is expected to play catchup; Profit booking expected in IT and FMCG stocks.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.