Nifty futures outlook- FIIs increase short positions, Nifty faces resistance; pharma & FMCG look positive

Nifty futures outlook: FIIs increase short positions, Nifty faces resistance; pharma & FMCG look positive

By Manojh Vayalar

The August series Nifty futures started with a premium of around 105 points for the current month. For the Nifty futures FIIs maintained around 41% short positions, higher than the last month’s series, which is now currently around 57% shorts. The index witnessed some short buildup created since the start of this series. We believe that till the time Nifty doesn’t reclaim 19,600 levels, a bounce in the index could be an opportunity to enter into shorts and hence sell on the rise is the trade sentiment in Nifty.

FIIs started this series with Longs position in the Index of around 59% vs 41% index shorts, which are currently around 57% shorts as of yesterday. For the Nifty, the IVs for the options stayed at around 12 levels in yesterday’s trade implying a possible buying of options for hedging. For the Bank Nifty 31st August, 44,600 strike call option has the highest open interest implying resistance around 44,200 – 45,000. Bank Nifty has strong support near 44,200 levels. For the Nifty, the VWAP (Volume weighted average price) of Nifty August Futures is around 19,500 implying that to be the resistance. Below this, Nifty is to be negatively biased for the short term towards 19,200.

With FIIs having higher short positions in the Index, currently higher than the last month, we expect Nifty could continue facing some resistance at the higher levels.

The ratio between Bank Nifty and Nifty is currently at 2.30, this ratio has a support at 2.19 and resistance near 2.36. We don’t expect Nifty to outperform as it faces resistance at higher levels. Sector-wise, Pharma & FMCG look positive in Nifty.

Nifty Long Straddle:Buy 31st August 19350 CE at 50Buy 31st August 19350 PE at 60Net Premium @ 110, SLOSS at 70. Target at 170.

(Manojh Vayalar, VP- Derivatives, Religare Broking. Views expressed are the analyst’s own. Please consult your financial advisor before investing.)