By Manojh Vayalar
The August series Nifty futures started with a premium of around 105 points for the current month. For the Nifty futures, FIIs maintained around 41% short positions, higher than the last month’s series, which is now currently around 49% shorts. The index witnessed a long buildup rally since the start of this series. 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 Long’s position in Index of around 59% vs 41% index shorts, which are currently around 51% longs as of yesterday. For the Nifty, the IVs for the options stayed at around 10 levels in yesterday’s trade implying a possible short strangle between 19,600-19,800 strikes. For the Bank Nifty 31st August, 46,000 strike call option has highest open interest implying resistance around 46,000 – 46,300. Bank Nifty has strong support near 45,200 levels. For the Nifty, the VWAP (Volume weighted average price) of Nifty August Futures is around 19,600 implying that to be the support. Above this, Nifty is to be positively biased for the short term towards 20,000.
With FIIs having higher short positions in the Index, currently higher than the last month, we expect Nifty could face some resistance only at the higher levels. The ratio between Bank Nifty and Nifty is currently at 2.31, this ratio has a support at 2.28 and resistance near 2.36. We don’t expect Nifty to outperform as it faces resistance at higher levels. Sector-wise Oil & Gas, Pharma & Cement look positive in Nifty.
Nifty Short Iron Fly:
Sell 31st August 19,650 CE@ Rs 350Sell 31st August 19,650 PE@ Rs 140Buy 31st August 20,200 CE@ Rs 80Buy 31st August 19,100 PE@ Rs 35Net Premium @ Rs 375, SLOSS @ Rs 475.Target @ Rs 200.
(Manojh Vayalar, VP-Derivatives, Religare Broking Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)