Jay Purohit
Nifty started the June series with some long positions. It started moving higher from the first session of the series and we witnessed the formation of long positions in the early days of June series.
In-between, we witnessed some selling pressure on the index, but that corrective move was not supported by fresh shorts. Eventually, Nifty concluded the June series with the gains of 8.42 percent over its May expiry close.
We saw some long positions getting rolled to July series as open interest increased by 13.17 percent on series-on-series basis. Rollover in Nifty stood at 78.93 percent, which is higher than its quarterly average of 69.70 percent.
Lower volatility also helped the index to make a higher base as India VIX remained in a broader range of 26 to 35 in June series. We witnessed buying across the board as all sectoral indices ended the June series in the green.
Among them, beaten down sectors like PSU Banking, Realty and Media were major gainers. The Market-wide rollover is at 91.67 percent and the majority of the positions are on the long side.
Market breadth also remained strongly in favour of advancing counters in June, which is a positive sign for the market.
In June series, FIIs remained net buyers in the cash market segment to the tune of Rs 11,644 crore while DIIs sold equities worth Rs 990 crores.
On the other hand, FIIs exited their long positions and did some fresh shorting in index futures and as a result, their ‘Long Short Ratio’ of index futures has reached from 63.21 percent (May Expiry) to 42.43 percent (June expiry).
On the options front, we are seeing OI concentration at 10,500, 11,000 and 11,500 Call options, while 9,000, 9,500 and 10,000 Put writers are also active. Options data suggests a positional wider trading range in between 9600 to 11000 zones.
Considering overall derivatives data, we may see buying interest in the index on dips to 9900 – 10000 zone. While an up move towards 10800 - 11000 levels cannot be ruled out.
In our May expiry rollover note, we clearly mentioned that short positions get rolled in BankNifty and there is a possibility of a further short-covering bounce. BankNifty outperformed the benchmark indices and rallied by over 12 percent in the June series.
Despite the up move, we hardly saw any noticeable long formation and majorly the up move was on back of short covering. Most of the positions formed in the June series are now out of the system as open interest has decreased by 8.67 percent on series on a series basis.
Rollover in the banking index stood at 80.60 percent, which is higher than its quarterly average of 72.64 percent. Traders shouldn’t get carried away with high rollover figures as this is because of the low base of open interest.
Currently, Bank Nifty is light on positions and further OI build-up in the coming days shall provide a directional move in the index.
As far as levels are concerned, 22500 is an immediate resistance for the banking index and a sustainable move above the same may lead to a rally towards 24000 mark. On the flip side, strong support can be seen around the 19500 – 20000 zone.
On stocks front, we witnessed a good amount of long positions getting rolled to July series in counters like Reliance Industries, RBL Bank, Godrej Prop, HPCL, Muthoot Finance, Canara Bank, Biocon, etc. While some stocks which added shorts are Exide Industries, IGL, and Pidilite Industries.
(The author is Technical & Derivatives Analyst, Motilal Oswal Financial Services Ltd)
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