By Gaurav Arora
The May series Nifty futures is currently trading with a premium of around 80 points.
For the Index futures, FII Net Index Long exposure is at 45% which is more or less at around the same levels for quite some time now.
After making record highs, the indices are struggling to find sustenance at higher levels.
Going forward, we believe 22,300-350 might be the major support and only a decisive close below it might bring in some downside.
VIX for the Nifty is currently at around 16, which has risen significantly from around 10 few days back implying a larger swing in this month. We expect VIX to remain in the range of 14-19 for the next few sessions.
For the Nifty, the IVs for the options were around 14 levels in yesterday’s trade.
For the Nifty, the VWAP (Volume weighted average price) is around 22,550-600 implying that to be the resistance. Above that, Nifty is to be positively biased for the short term towards 22,900-23,000.
The ratio between Bank Nifty and Nifty is currently at 2.18, this ratio has a support at 2.12 and resistance near 2.20. We expect Bank Nifty to trade in tandem w.r.t Nifty going forward.
Sector-wise, IT and Pharma look good in Nifty.
Nifty Short Straddle:-
Sell Nifty 16 May 22,500 PE @200
Sell Nifty 16 May 22,500 CE @ 202
Spread @402, Stop Loss – 450, Target – 300
(Gaurav Arora is a Derivatives Analyst at Religare Broking. Views expressed are the author’s own. Please consult your financial advisor before investing.)