Jay Purohit
The July series kicked off with some long positions and moved higher in the initial days of the new series. However, bulls failed to pull Nifty above the 12,000 mark as we witnessed some selling pressure at higher levels.
The benchmark indices plunged sharply after the announcement of the first Union Budget under Modi.20. As a result, Nifty posted a loss of around 5 percent on an expiry-to-expiry basis, resulting in the worst derivatives expiry since October 2018.
The fall was supported by some short positions, but most of them didn’t carry forward to the next series as the open interest decreased 6.89 percent on a month-on-month basis.
At the low base of open interest; rollover in Nifty stood at 73.73 percent, which is below its quarterly average of 77.89 percent.
The fall of July series was mainly driven by selling pressure from foreign institutional investors (FIIs) desk. They cumulatively sold equities worth Rs 13,035 crores in July series.
Meanwhile, DIIs remained net buyers in the cash market segment for Rs 13,749 crores. Highest open interest for August monthly expiry is placed at 11,000 and 11,200 Put and 12,000 and 11,500 call options.
Going forward, 11,200-11,000 would act as strong support for the Nifty; while immediate resistance can be seen around 11,600 – 11,700 levels.
Fresh build-up in the next few days would set the tone for the August series as overall positions are light in the Nifty.
In June series, we witnessed a decent short build-up in most of the banking counters and the same got rolled to July series as well.
As indicated by derivatives data, we saw decent selling pressure in many banking stocks in July series. The banking index formed a ‘Double Top’ pattern and started correcting sharply.
Bank Nifty underperformed the benchmark indices and concluded the July series with a loss of around 7 percent over its June expiry’s close. In the recent fall, we witnessed a blend of long unwinding and fresh shorting in Bank Nifty.
However, most of these positions didn’t get rolled to the next series as open interest decreased by 20.39 percent as compared to the last expiry. The rollover (76.51 percent) in Bank Nifty was also lower than its last three month’s average of 79.60 percent.
At the current juncture, Bank Nifty is light on positions and fresh build-up will decide further price movement in forthcoming days. Technically, immediate support for Bank Nifty is placed at 28,500 mark, while resistance can be seen around 30,200 levels.
On stocks front, we continued to see carnage in many frontline and midcap counters in July series too. Almost 85 percent of the stocks from the derivatives segment saw decent selling pressure in July series, which indicates complete dominance of bears throughout the month.
In the last series, we saw a long build-up in very few stocks and these longs got rolled to August series in stocks like PVR, Infosys, Asian Paints, and Dabur.
While stocks which added huge shorts in July series and the same got rolled to August series include stocks like RBL Bank, Tata Elxsi, M&M Fin, NBCC, Bata India, Petronet LNG, Bajaj Finance, Coal India, OIL, Bajaj Finserv, Axis Bank, Eicher Motors, etc.
Note: This is just an interpretation of derivative data and not trading advice.
(The author is AVP - Technical & Derivatives Research at Centrum Broking Limited)
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