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

Whether we will reach the millstone of 16000 and beyond in the August series or not, only time will tell us. (Image: REUTERS)

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.

This has been one of the most boring series for our market and it can easily be seen if we compare the vis-a-vis performance. In fact, if we take a glance at the intra-month movement as well, we can see Nifty trapped in a slender range of 500 points. Now after the last two days of expiry, Nifty is almost at the midpoint of the range and hence, it’s advisable not to take any directional view here. With a broader view, the trend remains sideways to positive till the time we do not slide below the crucial support of 15450. At the higher range of 15900 – 15950, one needs to stay light as we have witnessed surprising down move on multiple occasions after reaching this zone. So whether we will reach the millstone of 16000 and beyond in the August series or not, only time will tell us.

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.)