F&O Outlook- Trade in range and look for buying opportunities near 17500-17400 support

F&O Outlook: Trade in range and look for buying opportunities near 17500-17400 support

By Ruchit Jain

In March monthly expiry, we witnessed long rollovers in both Nifty and Bank Nifty to the April series as the rollovers were higher than the last 3-month average. However, during this week we have not seen any fresh additions in positions. In Monday’s session, the markets rallied sharply and surpassed the 18000 mark led by the HDFC twins, but the Nifty did not witness any fresh addition in the rally while unwinding was seen in Bank Nifty which indicates short-covering by traders.

The implied volatility has been falling and options writers have been on the front foot as falling IVs usually benefit option sellers. The call writers were active and had sold 18000-17800 strike options in the weekly series gone by, while in the coming weekly series 17900 and 18000 call options have decent open interest build-up which would be seen as immediate resistance in the coming week. On the flipside, open interest is scattered in put options and 17500-17400 will be seen as immediate support.

It seemed that FIIs have finally stopped selling in the cash segment, however, they have sold equities in the last couple of sessions and have turned net sellers in this calendar month so far. In the index futures segment, they have reduced some of their long positions and their ‘Long Short Ratio’ has reduced to 67%. On the other hand, retail traders have a ‘Long Short Ratio’ of around 51% in the index futures segment. The above data indicates that in the coming weekly series, we would see a broad range in the index with support around 17500-17400 and resistance around 18000. Traders should look to trade the range and look for buying opportunities when the market approaches the support end of the range. At higher levels, one should avoid chasing and book profits on long positions around resistance. Focusing on a stock-specific approach can give better trading opportunities in the coming week.

(Ruchit Jain is the Lead – Research at 5paisa.com. The views expressed are the author’s own. Please consult your financial advisor before investing.)