Nifty trade sentiment is ‘Sell on Rise’ till 19500; Bank Nifty resistance near 44000

Nifty trade sentiment is ‘Sell on Rise’ till 19500; Bank Nifty resistance near 44000

By Manojh Vayalar

The November series Nifty futures started with a premium of around 70 points for the current month.The Nifty has rolled around 83% and Bank Nifty around 79%. The rollovers seen in November series were likely short rollovers created near 19,500.For the Index futures, FII have reduced the short positions to 80% from 89%. The Index is now in a ‘Sell on Rise’ mode till 19,500 is not breached on closing basis, for the expiry. Even in the last month, the Index had witnessed short Rollovers in a similar way. 19,450-19,500 might be the immediate resistance and only a decisive close above it might open further upside. 19,200 might be the first support for the index.

FIIs started this November series with Short position in Index futures of around 89% vs 70% last month, which are currently around 80% shorts. For the Nifty, the IVs for the options rose to around 12 levels in yesterday’s trade implying more buying in 19,400 and below strikes. For the Bank Nifty 30thNovember, 44,000 strike Call option has huge open interest implying resistance at around 44,000. For the Nifty, the VWAP (Volume weighted average price) of Nifty November Futures is around 19,500 implying that to be the resistance. Below this, Nifty is to be negatively biased for the short term towards 19,200.

With FIIs still having substantial short positions in the Index Futures, we expect the Nifty could continue facing resistance at the higher levels and eventually drift lower to 19,200 levels.

The ratio between Bank Nifty and Nifty is currently at 2.25, this ratio has a support at 2.20 and resistance near 2.28. We expect Bank Nifty to underperform till 2.28 is not crossed.

Sector-wise, Pharma, Oil & Gas lookgood in Nifty.

Nifty Long strangle:-

Buy Nifty 16 NOV 19300 PE @65

19450 CE @100

Net Premium at 165

Stop loss at 80

Target 250.

(Manojh Vayalar, VP- Derivatives, Religare Broking. Views expressed are the author’s own. Please consult your financial advisor before investing.)