NSE Nifty 50 has continued to move in a range for successive trading sessions this week, and is likely to continue the trend in the coming week, analysts say. Overall, the 50-stock Nifty has fallen 1.5% so far this week, sliding from all-time highs. “For the coming week, NIFTY is unlikely to move past the 15700-15750 zone,” said Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services. Analysts believe a move below 15,500 could attract bears. Nifty entered the July series after gaining consecutively for previous three Futures & Options series.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services –
The outlook for Nifty and Bank Nifty for the upcoming expiry weekly expiry session is much identical and on similar lines. Nifty had seen the highest CALL OI concentration at 16,000; however, this has drifted lower to 15,700 followed by the second highest CALL OI at 15,800. So, for the coming week, Nifty is unlikely to move past the 15,700-15,750 Zone. The same is the case with Bank Nifty. Bank Nifty has maximum CALL OI at 35,000 and the highest PUT OI at 34,500. The index is likely to stay capped with any major move unlikely on any side.
Nifty and Bank Nifty saw their highest rollovers in a decade at 80% and 79% respectively. This was fueled by massive retail participation. Now, the major point to observe is that retail participants are classified as non-commercial/non-professional investors and they are wrong at major market tops as history shows it. This is one sentiment indicator, and reading of this data also hints at a formation of a likely top in the market unless the 16,000 points is taken out convincingly.
Rahul Sharma, Head, Technical and Derivatives Research, JM Financial Services –
It is a complete range-bound market where option writers are making money. Although the premiums are on the lower side, the decay that we are seeing is pretty fast. As long as 15,500 is not broken on the downside and 15,900 is not broken on the upside the consolidation may continue. The reason for consolidation is the rising dollar index while rupee is getting weaker and FII are still not in the buy mode in the cash segment. Broadly, till we are trading in the said range, it is an option writer’s market and once the breakout happens that is where the momentum comes in.
Global cues are fine; only the emerging market kitty is not attracting fresh flows. We saw a bullish engulfing candle last week, that has not repeated this week. Best thing to do is stick to strength stock.
Nifty Open Interest Put Call Ratio fell to 1.12 levels from 1.30 levels. Amongst the Nifty options (08-July Expiry), Call writing was seen at 15,800-15,900 levels, Indicating resistance is seen around 15,900 levels. On the lower side, support is seen in the vicinity of 15,600-15,700 levels where we have seen Put writing.
To sum it up, short build up in Nifty futures, Long unwinding in the Bank Nifty Futures, Call writing at 15,800-15,900 levels and short build up by FIIs’ in the Index Futures segment Indicates that one should remain cautious for the markets. Therefore, our advice is to remain cautious and wait for the Nifty to cross 15,900 levels for going long aggressively. On the lower side 15,600-15,700 level will act as an immediate support where Puts have been written. In the Bank Nifty, our advice is to remain cautious till it closes above 35,000 levels. On the lower side, support is seen in the vicinity of 34,500-34,700 levels.
Despite all the volatility, IVs continued to remain choppy and no major hedging positions were formed, which is pointing towards more upsides in coming days. For the July series, highest Call base is placed at 16,000 followed by 16,200. However, in case of any profit booking, June series major support of 15600 should provide cushion.
We feel short covering should trigger in private banks, which should push the Bank Nifty towards 36500. For a major part of the June series, Bank Nifty remained laggard and from expiry to expiry bases, apart from HDFC bank, most of them ended negative. We feel the July series should be the month for banking and outperformance could be possible from the banking space, which should push the Nifty towards 16,200. No sizable OI additions were seen on the Call side. However, Put writing block of almost 15 lakh shares was visible in 35,000 strike for the coming weekly expiry. This level should act as a major support for the coming weekly expiry.
Geojit Financial Services
Nifty weekly contracts have highest open interest at 15,800 for Calls and 15,700 for Puts while monthly contracts have highest OI at 16,000 for Calls and 15,500 for Puts. Highest new OI addition was seen at 15,700 for both Calls and Puts in weekly and at 16,000 for Calls and 15,000 for Puts in monthly contracts. FIIs increased their future index long position holdings by 1.94% and their future index short position by 17.83%. FIIs cut their position in index options by 32.33% in Call longs, 46.08% in Call shorts, 14.11% in Put longs and 28.49% in Put shorts.