By Nandish Shah
Nifty remained in the narrow variety of 5 hundred points through the complete July series to close with losses of .08%. This is the lowest series to series transform due to the fact June 2017. Bank Nifty continued its underperformance for the second consecutive series exactly where it ended the July series with the losses of .39% to close at 34692 levels. This is the second consecutive series loss for the Bank Nifty.
We have seen a larger rollover of 92% to the August series in the stock futures segment as against the last 3 series typical rollover of 88%. In the Nifty and Bank Nifty we have witnessed rollover of 83% and 81% as against the last 3 series typical rollover of 76% for them.
In the Stock futures segment, we are beginning the August series with an Open interest of 437 crore shares as against 422 Cr shares at which we had begun the July series.
Though Stock futures open interest at the starting of the series is 3% larger as compared to the last series, It is nonetheless 16% reduce than the all-time higher Open Interest of 523 crore which was seen in February 2018. This Lower Open in spite of markets are at an all-time higher indicates markets are not heavy in terms of positions.
One more notable factor is the Open Interest in the Nifty Futures. We are beginning the August series with the Nifty future OI of .95 Cr shares. This is the lowest Open Interest in the Nifty futures due to the fact October 2020 at the starting of the series. Moreover, It is only 50% of the last 15-year typical OI of 2 Cr shares.
On the other hand, We are beginning the August series with the Bank Nifty future OI of 20.22 lakh shares as against 19 lakh shares last series. This larger Open Interest coupled with the fall in the Bank Nifty through the second half of the July series indicates quick make-up
OUTLOOK FOR THE AUGUST SERIES
Use any correction to accumulate lengthy positions
To Sum it up, Lower stock Futures’ Open Interest (compared to all-time highs) in spite of more than hundred per cent rise in the Nifty from the March 2020 lows, Lower Open Interest in the Nifty Futures in terms of quantity of shares (half of the last 15-year typical), FIIS Index Future lengthy to quick ratio above one and Put writing at 15300-15500 levels indicates that downside is restricted in the marketplace and one should really continue to stay optimistic for the August series.
Moreover, Lower Open Interest in the Nifty and stock futures at the starting of the August series tells us that the derivative positions are not most likely to be a milestone about the neck of the markets for the August series also.
Therefore, for traders, our assistance would be to stay bullish and use any correction towards 15500-15700 levels to accumulate lengthy positions with SL of 15300 levels. On the larger side, 15900-16000 level to continue to act as a sturdy resistance exactly where we have seen get in touch with writing. Any close above 16000 level would outcome into quick covering which may possibly push Nifty to even 16300-16400 levels
Amongst the sectors Cement, Metal, IT and PSU Banks are most likely to do effectively in the August series.
(Nandish Shah is a Senior Derivative & Technical Analyst at HDFC Securities. Views expressed are the author’s personal.)