Nifty placed at midpoint of current range; traders should stay light, focus on individual themes

By Sameet Chavan

Wednesday’s spectacular recovery was followed by a pleasant start on Thursday in line with the global peers. During the remaining part of the session, we witnessed consolidation in a slender range in key indices. During the final hour, Nifty made an attempt to go beyond 15800 but due to lack of support from heavyweight constituents, Nifty concluded the session as well as the July series tad below the 15800 mark.

For the coming sessions, 15800 – 15850 would be seen as immediate hurdles; whereas on the lower side, 15700 followed by 15600 are the levels to watch out for. Thursday did not look like a monthly expiry session as there was no sign of volatility seen whatsoever. But the real show-stealer was the Metal space as we saw vibrant moves in almost all counters from this universe.

In the F&O space, we hardly saw any meaningful open interest activity in both the indices. Rollover in NIFTY and Bank Nifty stands at 82.75% and 81.20% respectively, which appears to be good if we consider the three-month average; but if when we compare the series or series OI change, there is no major addition or reduction in open interest. As far as FIIs activities are concerned, they preferred exiting some of their longs and rolling over a few bearish bets in index futures. This resulted in index futures ‘Long Short Ratio’ declining to 69% from 82% seen during the start of the series. In the cash segment, they continued their selling streak for the fourth consecutive month, selling to the tune of Rs 19,345 crores to date in July. Though on the face of it rollovers may look good but if we also factor in other data points, it doesn’t give any clear indication. Hence, until we don’t see any sustainable move beyond the recent range, traders are advised to stay light in the index and focusing on individual themes which have been doing good of late.

(Sameet Chavan is the Chief Analyst-Technical and Derivatives at Angel Broking. Views expressed are the author’s own. Please consult your financial advisor before investing.)