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September series rollover data suggests bulls will remain in control; 12,000 on the cards  

The crucial support for the Nifty is placed at 11300 and then 11111. While resistance can be seen around 12000 mark. Traders should use any dip towards 11300 as a buying opportunity.

August 28, 2020 / 12:20 PM IST

The Nifty50 started August series with some long positions. The index showed some corrective movement in the first two sessions of the series, but it again resumed its northward journey.

The index continued to make "Higher Tops – Higher Bottoms" and registered a new six month high of 11,617. It concluded the August series with gains of 4.12 percent over its July expiry close.

Bulls have been dominant in the last three months and as a result, the Nifty50 has rallied by more than 2,000 points after May expiry. The up move in August series was led by a decent rally in Banking, Auto, and Metal counters.

The up-move was supported by some long positions, but we haven’t noticed aggressive long build-up in the August series. The Nifty future closed the series with net OI addition of 9 percent and rollover stood at 79.92 percent, which is slightly higher than its quarterly average of 77.40 percent.

Close

Rollover data clearly indicates that some of the long positions formed in the last couple of months are still there in the system, but overall positions are on the lower side.

India VIX continued its southward journey for the fifth consecutive month as it fell by around 24 percent to conclude the August series at 18.90 levels.

Lower volatility also helped the index to make a higher base as India VIX remained in a broader range of 15 to 26 in the August series.

In August series, FIIs remained net buyer in the cash market segment in 17 out of 20 sessions and cumulatively bought equities worth Rs 17,183 crores. While DIIs sold equities to the tune of Rs 10,741 crores in August series.

On the other hand, FIIs added fresh long positions in the index futures and as a result, their ‘Long Short Ratio’ of index futures has increased from 66.31% (July Expiry) to 74.85% (August expiry).

Since the beginning of the September series, options data is scattered at various strikes. The maximum Put OI is seen at 11,000 followed by 11,500 strikes, while maximum Call OI is at 12,000 followed by 11,500 strikes.

Overall derivatives and structure of Nifty is positive along with strong market breadth. Thus, one should remain positive on the market until we see a strong reversal signal in the index.

Now, the crucial support for the Nifty is placed at 11,300 and then 11,111. While resistance can be seen around the 12,000 mark. Traders should use any dip towards 11,300 as a buying opportunity.

After the lacklustre movement in July series, Bank Nifty outperformed the benchmark indices in the August series and rallied by over 9 percent.We witnessed a blend of short-covering and fresh buying in the banking index during the August series. The index witnessed a rollover of 77.91 percent, which is slightly lower than its three months average of 79.01 percent.

While open interest decreased marginally by 2.68% on series on a series basis. Currently, Bank Nifty is light on positions with marginal longs.

As far as levels are concern, 22,400 is immediate support for the banking index and below that strong base is at 21,000 mark. On the flipside, immediate resistance can be seen around 242,00 and then 25,000 zones.

On stocks front, we witnessed a good amount of long positions getting rolled to the September series in counters like JSW Steel, Tata Power, Motherson Sumi, Apollo Tyre, RBL Bank, Jubilant Food, Tata Steel, Indusind Bank, etc. While some stocks which added shorts are Concor, Bharti, Hind Petro, MRF, etc.

(The author is Technical and Derivatives Analyst, Motilal Oswal)

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.

Jay Purohit

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