May series started with a good amount of long positions, but unlike the previous five series, Nifty breached the previous expiry month’s low and corrected in the first fortnight of the series.
The fall was on the back of a long unwinding and we didn’t see any noticeable shorts. However, the index again started rebounding in the second half of the series.
The Nifty50 moved in a broader range of 933 points in May series and touched the magical number of 12,000 on May 23.
However, the index ended the series a tad below the 12000 mark, with a gain of 2.61 percent over the April expiry close. The month gone-by was very volatile for the Indian market as both Bulls and Bears have fought for their dominance.
The volatility index (India VIX) also rallied to 30 levels due to uncertainties related to the outcome of general elections. The rally seen in the last few days was supported by a good amount of long positions.
The fresh long positions were formed at a low base of open interest and good rollovers indicates that most of the same got carried forward to the June expiry.
Rollover in Nifty stood at 71.93 percent, which is better than its quarterly average of 69.46 percent. However, the open interest decreased by 4.05 percent on a month-on-month basis.
FIIs activity remained subdued in the cash market segment, as they were the net seller in equities worth Rs 2,768 crore in May expiry. On the other hand, DIIs turned net buyers in cash market segment last month by Rs 6,573 crore.
Highest open interest for June monthly expiry is placed at 11,500 & 11,000 put and 12,500 & 12,000 call options. Going forward, 11,500 – 114,00 would act as strong support for Nifty; while resistance can be seen around 12,500 – 12,600 levels.
Looking at the overall derivatives activity, we are expecting a continuation in ongoing optimism towards 12,300 – 12,500 in coming weeks.
After some falls in April series, BankNifty outperformed the benchmark indices and rallied by 6.68 percent in the May series. The banking index also corrected in the first fortnight of May series on the back of long unwinding.
In line with the Nifty, banking index too rallied sharply in the second fortnight with huge long positions. Most of the long positions formed in the last two weeks got rolled to June series as open interest has increased by 7.29 percent on a month-on-month basis.
The rollover (82.99 percent) was much higher than its quarterly average of 74.01 percent. Considering the strong derivative data, we may see outperformance in the banking index in the upcoming month.
For June series, support for BankNifty is placed in the zone of 30,300 – 30,100 level. While some resistance can be seen around 32,500 – 32,600 levels.
At the current juncture, we are witnessing long rollovers in stocks such as SRF, L&T, NCC, Mannapuram Finance, SBI, JustDial, BEML, etc.
Stocks which added shorts in May series and the same got rolled to coming month are PC Jeweller, DHFL, Cadila Healthcare, Escorts, Motherson Sumi, Reliance Infra, and Balkrishna Industries, etc.
(The author is Technical & Derivatives Analyst at Centrum Broking Limited)
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