Home Share Market F&O expiry outlook: High volatility in Nifty on playing cards in May collection, keep away from aggressive longs; assist at 17000

F&O expiry outlook: High volatility in Nifty on playing cards in May collection, keep away from aggressive longs; assist at 17000


By Ruchit Jain

The April collection began on an optimistic be aware whereby NSE Nifty 50 index rallied and reclaimed the 18000 mark initially of the collection. However, we then witnessed unwinding of positions in indices which led to a correction and the index corrected to breach beneath 17000 degree. Although the Nifty 50 traded in a broad vary on this expiry, it ended with a lack of over a per cent in comparison with March collection shut.

The Rollovers in Nifty 50 are at 78% whereas that in Bank Nifty are at 85%, that are decrease than final collection. The open curiosity base initially of the collection can also be low in each the indices which point out insecurity amongst market members. FIIs have unwound a lot of their lengthy positions and initially of the May collection; their ‘Long Short Ratio’ stands at 35%. This implies that 65% of their positions in index futures are on the quick facet initially of the brand new collection. 

This knowledge doesn’t sound optimistic and as they’ve been promoting within the money phase too, this may not be supportive for our markets. On the opposite hand, the identical ratio for retail shoppers stands at 60%. This signifies that retail traders are bullish whereas FIIs are bearish.  For the approaching collection, the open curiosity knowledge scattered initially of the collection, nonetheless, open curiosity focus is seen at 17500 name and 17000 put choices.  

India Vix is buying and selling beneath the extent of 20 which is in its consolation zone. However, we anticipate larger volatility within the May collection as effectively and therefore, merchants are suggested to maintain a tab on the volatility index. 

The above knowledge doesn’t pose a optimistic image for the market. Hence, merchants are suggested to keep away from aggressive longs till we see recent lengthy formations initially of the brand new collection. It could be essential to see how recent positions are fashioned initially of latest collection, and particularly how FIIs construct new positions within the subsequent few classes. Looking on the present knowledge, we advise that in case of pullback in the direction of 17400-17500, one ought to look to loosen up lengthy positions. On the flipside, 17000 adopted by 16800 are the speedy helps and if these helps are breached, then we may see a corrective section within the close to time period.

(Ruchit Jain is the Lead – Research at 5paisa.com. The views expressed are the writer’s personal. Please seek the advice of your monetary advisor earlier than investing.)

Source: www.financialexpress.com”