Nifty trading sentiment indicating ‘buy on dips’ strategy; Banking, IT and metals top bets

Nifty trading sentiment indicating ‘buy on dips’ strategy; Banking, IT and metals top bets

By Manojh Vayalar

The December series Nifty futures started with a premium of around 100 points for the current month. The Nifty has rolled around 73% and Bank Nifty around 80%.For the Index futures, FII have reduced the short positions to 56% from 64% at the start of the December series. The index is now in a ‘Buy on Dips’ mode till 20,000 is not breached on closing basis, for the first fortnight of the December series. 20,200-20,300 might be the immediate support and only a decisive close below it might bring in further downside. VIXfor the Nifty is currently at 13.5 and likely to remain in the 11 to 15 range implying a range of around 800 points.

The ratio between Bank Nifty and Nifty is currently at 2.25, this ratio has a support at 2.20 and resistance near 2.28. We expect Bank Nifty to outperform the Nifty back towards 2.28.

Sector-wise, Banking, IT and Metals look good in Nifty.

Nifty Call Spread:-

Buy Nifty 28 DEC 21000 CE @ 205

Sell Nifty 28 DEC 21400 CE @ 75

Spread @130, SL @ 60, Target 350.

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