By Manojh Vayalar
The October series Nifty futures started with a premium of around 100 points for the current month.The Nifty has rolled around 34% and Bank Nifty around 38%. The rollovers seen into November series are majorly short rollovers. The index decisivelybreached the 19,400 mark in Monday’s trade.For the Index futures FII have raised the short positions to 74% as of Friday 20 Oct.
FIIs started this October series with Short position in Index futures of around 70% vs 50% last month, which are currently around 74% shorts as of Friday. For the Nifty, the IVs for the options rose to around 12 levels in yesterday’s trade implying more buying in 19,400 and below strikes. For the Bank Nifty 26thOctober, 44,000 strike Call option has huge open interest implyingresistance at around 44,000. For the Nifty, the VWAP (Volume weighted average price) of Nifty November Futures is around 19,600 implying that to be the resistance. Below this, Nifty is to be negatively biased for the short term towards 19,000.
With FIIs increasing short positions in the Index Futures, currently higher than the start of the series, we expect the Nifty could continue facing resistance at the higher levels and eventually drift lower to 19000 levels.
The ratio between Bank Nifty and Nifty is currently at 2.24, this ratio has a support at 2.20 and resistance near 2.28. We expect Bank Nifty to underperform till 2.28 is not crossed.
Sector-wise, select IT and Pharma lookstable inthe Nifty.
Nifty Bear Put spread:-
Buy Nifty 28 Oct 19300pe@100
Sell 19100pe@35
Spread at 65, SLOSS at 20,
Target – 150.
(Manojh Vayalar, VP- Derivatives, Religare Broking Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)
