Sep 3, 2023
F&O expiry outlook: High volatility in Nifty on cards in May series, avoid aggressive longs; support at 17000
By Ruchit Jain
The April series started on an optimistic note wherein NSE Nifty 50 index rallied and reclaimed the 18000 mark at the start of the series. However, we then witnessed unwinding of positions in indices which led to a correction and the index corrected to breach below 17000 level. Although the Nifty 50 traded in a broad range in this expiry, it ended with a loss of over a per cent compared to March series close.
This data does not sound optimistic and as they have been selling in the cash segment too, this would not be supportive for our markets. On the other hand, the same ratio for retail clients stands at 60%. This indicates that retail investors are bullish while FIIs are bearish. For the coming series, the open interest data scattered at the start of the series, however, open interest concentration is seen at 17500 call and 17000 put options.
India Vix is trading below the level of 20 which is in its comfort zone. However, we expect higher volatility in the May series as well and hence, traders are advised to keep a tab on the volatility index.
The above data does not pose a positive picture for the market. Hence, traders are advised to avoid aggressive longs until we see fresh long formations at the start of the new series. It would be crucial to see how fresh positions are formed at the start of new series, and especially how FIIs build new positions in the next few sessions. Looking at the current data, we advise that in case of pullback towards 17400-17500, one should look to lighten up long positions. On the flipside, 17000 followed by 16800 are the immediate supports and if these supports are breached, then we could see a corrective phase in the near term.
(Ruchit Jain is the Lead – Research at 5paisa.com. The views expressed are the author’s own. Please consult your financial advisor before investing.)
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