By Manojh Vayalar
This January series started on a flat tone for both the Nifty and Bank Nifty. The last 8 to 10 sessions have been range bound with the Nifty finding support near 17800 and resistance around 18100. The VIX is still at 14.5 implying further range-bound sessions. With the quantum of open Interest carried for the Nifty being low, a trending move in the indices is still not evident. Positioning in the Nifty futures was at 1.05 cr vs 1.11 cr open interest last month. Lower open interest implies lack of clear trend in the index. Generally, a lower positioning brings in range-bound movement.
FIIs started this series with around 56% vs 77%, currently at 40% as of yesterday implying nervousness in the index. Bank Nifty positioning is also on the lower side nearly 25.5 lakh implies lackluster movement. For the Bank Nifty the IVs for the options rose from 16.3 to around 17.7 levels in yesterday’s trade implying buying of put options in ATM strikes. Bank Nifty to be in a range-bound session with strong support at 41800 and resistance near 43000. The prevailing Nifty the VWAP (Volume weighted average price) of Nifty January is around 18000 which might act as a pivot for the series.
The ratio between Bank Nifty and Nifty is currently at 2.35, this ratio has support at 2.28 and resistance near 2.38. We do not expect outperformance by Bank Nifty as of now. Huge long buildup of at least 8 to 10 lakhs might hold the potential to trigger a trending rally in the index, which is not evident as of current data. Sector-wise, IT might show outperformance for the rest of the series. HCL Technologies, Tech Mahindra are our preferred picks from this space.
ONGC has seen huge long buildup in the last 2 months. We believe, with 143 as an entry, the stock can rally till 155 in this series with support near 138. Tata Motors has seen a good delivery-based buying at 410 levels from which one can accumulate for a target of 440 while keeping stop loss at around 380.
(Manojh Vayalar is VP – Derivatives Research, Religare Broking. The views expressed are the author’s own. Please consult your financial advisor before investing)