Nifty futures opened at 4136 and saw a low of 4081 and touched a high of 4192 on Friday. Inflation numbers on Friday came in lower than last week.
Last week, the markets saw increased volatility following the global cues. On a weekly basis, Nifty June futures closed at 4129, a gain of 7 points over the previous week, while the Sensex closed at 14163, a gain of over 99 points. The indices appear to be flat but volatility was high.
Nifty futures opened at 4136 and saw a low of 4081 and touched a high of 4192 on Friday. Inflation numbers on Friday came in lower than last week. The week also saw successful completion of one of the largest IPOs - the DLF public issue.
In the derivatives segment, the average daily volumes were about Rs 32,000 crore. The total open interest as on Friday closing stood at Rs 68,900 crore while futures open interest was Rs 50,200 crore. The Nifty open interest P/ C ratio stood at 1.26.
During the week, good amount of short covering was seen in Nifty, banking, metals and cement stocks. FIIs, who had sold over Rs 4,000 crore in Nifty futures, partly covered their positions on Thursday and Friday. Further, the implied volatility of Nifty futures decreased from 28% to over 24%. The Nifty discount moved in the range of 11- 30 points.
Capital goods and cement stocks gained while banks and metals were volatile. Stocks which are near their marketwide position limits are Nagarjuna Fertilisers (94%), JP Hydro (90%), SRF (89%), IDBI (88%), Essar Oil (86%) and Jindal Stainless (85%). Prominent gainers in derivatives during the week were ACC, Aban, Educomp, GMR Infra, Nicolas Piramal, Titan Industries and United Phosphorus.
The most active futures were Nifty futures, Reliance, SBI, Reliance Cap, RCom and GMR Infrastructure.
On the options front, increased activity was seen in Nifty 4100 Calls, 4200 Calls and 4300 Calls. Nifty 4200 Puts, 4100 Puts and 4000 Puts witnessed high activity in terms of volume and open interest. Technical studies indicate that Nifty is likely to face strong resistance around 4225 levels.
Unless, 4225 levels are breached upwards on closing basis, the trend is likely to be sideways. The weekly resistance levels for Nifty futures are placed at 4185 and 4225 whereas the weekly support levels are at 4080 and 4000. After the completion of DLF’s mammoth issue, the ICICI Bank issue is opening next week.
The markets have managed to stay afloat on the back of solid global market performance. It appears that short positions in Nifty futures are being created on account of expected muted numbers from technology companies in the June quarter. The Nifty could bounce back with a vengeance when the short rollovers take place closer to expiry on the 28th of this month.
Motilal Oswal Securities info@motilaloswal.com
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