See F&O expiry closer to 8600 on Nifty: Religare Securities

With the futures and options (F&O) expiry due today there is an equivalent amount of long as well as short positions which were there last week, says Manoj Murlidharan of Religare Securities.

In an interview with CNBC-TV18 he said that Nifty might inch towards 8,600 and the expiry might be closer to that. Murlidharan said,"I have a sell call if we get to levels of at least 8,630 on the future only then we sell the Nifty. If we are getting rather a level of 8,530-8,540 we buy Nifty with a 30 point of stop loss and a target close to 8,600."

Below is the verbatim transcript of Manoj Murlidharan’s interview to Latha Venkatesh on CNBC-TV18. Q: Actually SGX Nifty is threatening to start gap down so what is the Nifty trade today, where might it end? A: If you remember last Thursday is when we had a sell call and believe me for 120 points of Nifty it took almost a week’s time. Yesterday the target was achieved. The thing here is there is equivalent amount of long as well as short positions which were there last week. There was some long unwinding which was happening on both the sides of the positions. The bulls and bears are almost intact. Now the only advantage the bears might have is Nifty has got around Rs 1.15 crore of October positions which has still to be rolled into the November positions and I doubt they might be doing that to that extent. If we go with the Bank Nifty somewhere closed to an Rs 8.6 lakhs now the expiry trade works a lot on the volume weighted average price (VWAP) concept. Ideally as you said the SGX is down so a gap down opening cannot be ruled down. After that 8,560 odd I guess that should be the low for the Nifty more or less 8,560 or 8,540 odd. After a gap down opening maybe 20-30 points more on the down side. An eventually we might see some short covering which comes through the route of Bank Nifty. If you remember the days of Tuesday and Wednesday, Monday also precisely the second half there was lot of buying which happened in terms of long roll. If we see that long roll cost which used to be around 56 basis points for the Indices it is somewhere closed to around 46. Generally, when there is a correction the long roll cost also goes down. We have seen good put writing which is at 19,300 strike for the Bank Nifty and for the Nifty it is still intact at 8,500. We believe closure to 8,530-8,550 Nifty should or may be rather might find a support. We might inch towards the 8,600 and the expiry might be closer to that. I have a sell call if we get a levels of at least 8,630 on the future only then we sell the Nifty. If we are getting rather a level of 8,530-8,540 we buy Nifty with a 30 point of stop loss and a target close to 8,600.