The May series started on a weak note with selling pressure seen across the board. A significant closure of long positions was seen in stock futures in the first week of the series following which Nifty corrected towards 8,850-8,900 levels. However, the sell-off was gradual in nature without any 'panic'. The supports of 8,750-8,800 levels as suggested by the Options data acted as floor.
Further, in the latter half of the month, with significant Open Interest (OI) addition in heavyweight sectors and FII segment turning positive, the series ended with a smart rally towards 9,450-9,500. Nifty closed with a loss of 3.74 percent and Bank Nifty closed with a loss of 11 percent on expiry basis.
Nifty50 has begun the June series on the back of positive sentiment. Trend support is seen at 8,800 and buying on dips is advisable. Maximum open interest (OI) is seen at 9,000 strike Put Options and 10,000 strike Call Options. This indicates the broader range for the June series.
Over the last week, significant addition was seen in most of the frontline sectors – Banking, Metals, Auto and IT. This coupled with bullish reversal as per options data suggests possibility of a positive sentiment for the next few weeks.
Market-wide rollover is seen at 93 percent. Nifty rollover is at 76 percent as compared to 3-month average of 70 percent. Bank Nifty rollover is seen at 81 percent as compared to 3-month average of 71 percent. Marketwide rollover remains strong indicating continuation of bullish sentiment. Unless significant closure of positions is seen or a change in the Options data setup, we expect this upmove to continue towards 10,000-10,200 levels. Support remains at 8,800 levels.
Financial services, Infra and Auto stocks have witnessed addition in open interest with strong rollovers. Banking and Pharma have seen reduction in positions indicating profit booking.
On inceptions of the new series, FII Segment has reduced short positions in the index futures segment. PRO Segment has reduced long positions in Index futures. OI concentration is seen at 9,000 Put and 10,000 Call Options.
The author is Head of Research - Derivatives at Kotak Securities.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.