By Gaurav Arora
The Aug series Nifty futures is currently trading with a premium of around 100 points. The index after a decent run up is showing some signs of turnaround or profit taking. Some OI addition was seen in benchmark index futures in the last few days.
To put it in numbers, the Open Interest stands at around 6.7 lakh contracts as compared to 6.4 odd at the beginning of the series.
Bank Nifty continues with its underperformance, the ratio which was at 2.2 at the start of the series is now at around 2.11.
For the Index futures, FII Net Index Long exposure is around 74% which saw a minor dip from around 84%. Statistics suggest markets tend to consolidate and witness some profit taking at such elevated Long Positions.
Going forward, we believe 24150-200 is the base and would be the major support for the benchmark and only a decisive close below it might bring in some downside.
VIX for the Nifty is currently at around 13. Going forward, it might continue to be in the range of 11-16.
For Nifty, the VWAP (Volume weighted average price) is around 24,150-200 implying that to be the key level. For Bank Nifty, it comes out to be at 50800-51000.
The ratio between Bank Nifty and Nifty is currently at 2.11, this ratio has a support at 2.10 and resistance near 2.19. We expect Bank Nifty to continue with its underperformance.
Any bounce towards 52,500-800 should be looked at as a shorting opportunity in the Banking index with 53,500 as a Stop.
Sector wise, IT, FMCG & Pharma look good in Nifty.
Strategy
Nifty SHORT STRADDLE:-
SELL Nifty 1 AUG 24,400 PE @ 155
SELL Nifty 1 AUG 24,400 CE @ 260
Spread @ 415, Target 270 Stop Loss @ 460
(About the Author: Gaurav Arora is a Derivatives Analyst at Religare Broking)
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