By Manojh Vayalar
This June series Nifty futures started with a premium of 70-80 points for the current month. For the Nifty futures, FII maintained around 40% short positions, lesser than last month’s series, which is now currently up to around 48% short. The index witnessed a long buildup rally since the start of this series which later faced profit booking, currently at lower positions. We believe that a dip in the index could be an opportunity to enter into longs and hence the ‘Buy on Dips’ is the trade sentiment in Nifty.
FIIs started this series with around 60% vs 40% index shorts last month which are currently around 48% as of yesterday. For the Nifty, the IVs for the options stayed at around 11 levels in yesterday’s trade implying a possible short straddle at 18700 strikes. For the Bank Nifty 29th June, the 44000 strike call option has the highest open interest implying resistance near these levels. Bank Nifty has strong support near 43000 levels now. For the Nifty, the VWAP (Volume weighted average price) of Nifty June Futures is around 18600 implying that to be the support. Above this, Nifty is to be positively biased for the short term towards 18800.
With FIIs having medium shorts in the index, currently higher than the last month, we expect Nifty could face some resistance at higher levels. The ratio between Bank Nifty and Nifty is currently at 2.32, this ratio has a support at 2.28 and resistance near 2.37. We don’t expect Bank Nifty to outperform as it faces resistance at higher levels. Sector-wise, select AUTO stocks, CEMENT & IT look positive in Nifty.
Nifty Short Straddle:
Sell 29th June 18700 CE@ 135
Sell 29th June 18700 PE@ 105
Net Premium @ 240, SL 340
Target @ 120
(Manojh Vayalar, VP- Derivatives, Religare Broking Ltd. Views expressed are author’s own.)