By Manojh Vayalar
The September series Nifty futures started with a premium of around 150 points for the current month. For the Nifty futures FII maintained around 50% short positions, higher than the last month series, which is now currently around 51% shorts. The index has added marginal shorts since the start of this series. We believe that till the time Nifty doesn’t close above 20,000 levels, bounces could be an opportunity to enter into shorts and hence Sell on Rise is the trade sentiment in Nifty.
The VIX for the Nifty has been more or less at around 12% implying some put options being bought in at the money strikes ahead of expiry.
FIIs started this series with Longs position in Index of around 50% vs 50% index shorts, which are currently around 51% shorts as of yesterday. For the Nifty, the IVs for the options stayed at around 12 levels in yesterday’s trade implying higher caution. For the Bank Nifty 28th September, 45000 strike call option has highest open interest implying resistance around 45,100 – 45,200. Bank Nifty has some support near 44,200 levels. For the Nifty, the VWAP (Volume weighted average price) of Nifty September Futures is around 19,900 implying that to be the resistance. Below this, Nifty is to be negatively biased for the short term towards 19,500.
With FIIs increasing short positions in the Index, currently higher than the last month, we expect Nifty could continue facing resistance at the higher levels.
The ratio between Bank Nifty and Nifty is currently at 2.27, this ratio has a support at 2.20 and resistance near 2.36. We expect Nifty to underperform as it finds resistance at higher levels.
Sector-wise, Pharma & FMCG look positive in Nifty.
Nifty Put Spread:
Buy 28th September 19700 PE@ 60
Sell 28th September 19600 PE@ 32
Net Premium @ 28, SLOSS @5.
Target @60.
(Manojh Vayalar, VP- Derivatives, Religare Broking Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)
