31 Jan , 2023 By : Monika Singh
This February series started on a negative tone for both the Nifty and Bank Nifty. The positioning in the Nifty futures was at 98 lakh vs 105 lakh Open Interest last month. Lower Open Interest implies a lack of clear trend and nervousness in the index. We expect Nifty to be in the 17300-18000 range for the first fortnight of the contract.
FIIs started this series with around 38% vs 56 % Index longs last month. With some volatility in the Feb series, they are down at around 18% Longs as of yesterday. For the Nifty, the IVs for the options fell to 19.1 levels in yesterday’s trade implying selling in options, majorly 17500 put. For the Bank Nifty, the 42000 strike Call option has the highest Open Interest implying strong resistance near the levels. The Nifty VWAP (Volume weighted average price) of Nifty Feb is around 18050 implying that to be the resistance for these shorts.
With FIIs heavily short in the Index before the Union Budget and huge selling in the cash market, we expect the Nifty to be under pressure in the short term. They are short on the Index at around 81% as of yesterday.
The ratio between Bank Nifty and Nifty is currently at 2.29, this ratio has support at 2.26 and resistance near 2.32. We do not expect outperformance by Bank Nifty in this series. Bank Nifty currently at 40300 might Sell on the rise as well. Levels of 40700-40850 are the resistance as per spot Bank Nifty and 39300-39400 as the support. The major weights in Bank Nifty namely SBI and HDFC Bank might be in Sell on rise as well.
We expect a Nifty short covering rally beyond 18050 only, else we may remain in Sell on Rise with positional support near 17400. Sector-wise, Oil & Gas and Chemical look positive, however; Bank might witness pressure. Coal India has seen a huge long buildup in the last session. We believe the stock might rally till 235-238 in the short term with support near 217. Kotak Bank might witness some pressure near 1750-1760 levels and support is around 1680 for the scrip. Tata Motors with a base at around 422 levels can rally till 460 in this series.
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