On Friday, the Nifty closed on a positive side on the back of a strong spike in volume in the last one hour of trade. Overall, derivatives volume declined by over 25% on Friday as most of the participants preferred to stay away from the market on account of the weekend as well as range-bound movement in markets.
The Nifty moved in a narrow band of 25 points throughout the day. According to an intraday chart, 72 per cent of the volume was traded between 5,375 and 5,395 and around 24 per cent above 5,395.
From Global side, the Dow Jones Industrial reacted sharply on Friday, slipping 2.52% due to the disappointment second-quarter revenues of Bank of America, Citigroup and General Electric as the same more weaker than what markets was expected. The SGX Nifty, too, reacted to the global cues and closed at 5,355 — down 44 points over the counter at the Singapore Stock Exchange. This means the Nifty is likely to open around this level on Monday.
However, there is no sign of a sharp fall in the Nifty as derivatives participants have not started liquidating their positions as yet. There has been some profit-booking from foreign institutional investors (FIIs) in the last couple of days, according to the open interest (OI) position in the derivatives segment.
The Nifty July futures closed at a four-point premium on Friday and added 817,850 shares in OI. But, according to intraday trading data, more sell-side orders from top traders and a change of hands from mid-size (50-100 contracts) participants have been generated, indicating a build-up of short positions on Friday.
According to Bloomberg data, the Nifty moved up sharply in the last 45 minutes on account of the spike in volume. The time-price opportunity (TPO) data for the day showed strong support at 5,362, while the spike in volume in the last hour projected a 5,426 level for the Nifty. However, profit-booking from almost all traders and poor volumes suggest a subdued opening on Monday.
Among stocks futures, TCS gained 6.23 per cent on a strong first-quarter performance. The July futures of TCS saw a 30 per cent rise in OI, mostly through buy-side trades. A price projection on the basis of TPO as well as volume data suggests a fresh rally in TCS at around Rs 860.
IFCI rose 5.7 per cent on strong buying activity during the closing hour. TPO data suggests strong support for IFCI at around Rs 57.70.
The options open interest concentration has shifted to the 5300-strike put option with the highest open interest. The broad trading range has shifted to 5,300-5,500 for this week.
Implied Volatility of call options increased and closed at 17.10% on Friday while the average IV of put options ended at 18%. Nifty VIX also closed lower on Friday. It is expected to consolidate around these levels. This indicates range bound trading for next week. The options open interest witnessed addition in lower strikes puts options on the short side. The options open interest concentration for July series continued to be in the 5300 strike put with the highest open interest of above 8.8 million. The put-call ratio of open interest increased last week and ended at 1.49 levels, which indicates put writing.
As a gist, Nifty Future is Bullish for now. Only a close below 5344 will end the near term bullish sentiment and take Nifty Futures towards 5225. On the upside, we may see 5500 in this expiry itself.
FOR TODAY: If NIFTY future open around 5365-5370 and stops going downside below 5350, will go long with a strict stoploss of 5344.
My view is to take every dip as a buying opportunity.
Stock specific watch : IFCI, TCS, AUROBINDO PHARMA.
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