By Gaurav Arora
The July series Nifty futures is currently trading with a premium of around 60 points. The index has been gradually inching higher since the start of rollovers from June to July.
Meaningful OI addition was also seen on expiry to expiry basis. To put it in numbers, the Open Interest stands at 6.4 lakh contracts as compared to 5.7 odd at the beginning of the previous series. Bank Nifty outperformed but going forward, it may just be at par w.r.t the benchmark.
For the Index futures, FII Net Index Long exposure is above 80%. Statistics suggest markets tend to consolidate and witness some profit taking at such huge levels. However, the texture would remain Positive i.e. Buying the Dips would continue to reward.
Going forward, we believe 23,600-700 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 14, going forward, we believe it may be in the range of 11-17 for the time being.
For the Nifty, the IVs for the options were around 15% levels in yesterday’s trade. For Nifty, the VWAP (Volume weighted average price) is around 23,700-750 implying that to be the key level. It should be watched as a Fresh Long formation Zone. For Bank Nifty that comes out to be at 51500-51800.
The ratio between Bank Nifty and Nifty is currently at 2.19, this ratio has a support at 2.15 and resistance near 2.21. We expect Bank Nifty to trade at par with the benchmark. Any decline towards 51,500-800 should be looked at as a Fresh Buying opportunity in the Banking index with 50,500 as a Stop.
Sector-wise, IT, Pharma & FMCG look good in Nifty.
Nifty CALL RATIO SPREAD
BUY Nifty 11 JUL 24200 CE @ 200
SELL Nifty 2* 11 JUL 24,500 CE @ 80
Spread @ 40, Target 100
About The Author: Gaurav Arora is Derivatives Analyst at Religare Broking .)
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