Nifty positively biased for short term towards 19600 shows July futures data; Auto, Pharma look positive

Nifty positively biased for short term towards 19600 shows July futures data; Auto, Pharma look positive

By Manojh Vayalar

This July series Nifty futures started with a premium of around 95 points for the current month. For the Nifty futures, FIIs maintained around 40% short positions, lower than the last month’s series, which is now currently around 30% 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 Longs position in the Index of around 66% vs 34% index shorts last month which are currently around 30% as of yesterday. For the Nifty, the IVs for the options stayed at around 11 levels in yesterday’s trade implying a possible short straddle at 19300 strikes. For the Bank Nifty 27th July, the 45000 strike call option has the highest open interest implying resistance around 45500 – 45600. Bank Nifty has strong support near 44200 levels. For the Nifty, the VWAP (Volume weighted average price) of Nifty July Futures is around 19000 implying that to be the support. Above this, Nifty is to be positively biased for the short term towards 19600.

With FIIs having lower short positions in the Index, currently lesser than the last month, we expect Nifty to face some resistance at the higher levels. The ratio between Bank Nifty and Nifty is currently at 2.34, this ratio has a support at 2.30 and resistance near 2.37. We don’t expect Nifty to outperform as it faces resistance at higher levels. Sector-wise, Auto, Pharma, Cement & Media look positive in Nifty.

Nifty Short Straddle:

Sell 27th July 19300 CE@ 275

Sell 27th July 19300 PE @ 155

Net Premium @ 430, STOP LOSS @550.

Target @250

(Manojh Vayalar, VP- Derivatives, Religare Broking Ltd. Views expressed are author’s own.)