By Manojh Vayalar
The December series Nifty futures started with a premium of around 100 points for the current month. The Nifty has rolled around 73% and Bank Nifty around 80%. For the Index futures, FIIs have reduced the short positions to 40% as of yesterday from 56% at the start of the December series.
The index is now in a ‘Buy on Dips’ mode till 21000 is not breached on closing basis, for the December series.
21000-21200 might be the immediate support and only a decisive close below it might bring in further downside.
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VIX for the Nifty is currently at 13.5 and likely to remain in the 11 to 14 range implying a range of around 600 points.
FIIs started this series with Short position in Index futures of around 64% vs 89% last month, which are currently down to around 40% shorts. For the Nifty, the IVs for the options remained around 13 levels in yesterday’s trade.
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For the Bank Nifty 28th December, 46000 strike Put option has huge open interest implying support at around 46000. For the Nifty, the VWAP (Volume weighted average price) of December Futures is around 21000 implying that to be the support. Above this, Nifty is to be positively biased for the short term towards 21600.
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With FIIs reducing their short positions majorly as short covering, we expect Nifty to continue with its positive bias.
The ratio between Bank Nifty and Nifty is currently at 2.24, this ratio has a support at 2.20 and resistance near 2.27. We expect Bank Nifty to outperform the Nifty in the short term.
Sector-wise, Banking, IT and Pharma look good in Nifty.
Nifty Call Spread:-
Buy Nifty 28 DEC 21300 CE @ 240.
Sell Nifty 28 DEC 21600 CE @ 90.
Spread @150, SL @ 70, Target 250.
(Manojh Vayalar, VP- Derivatives, Religare Broking Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)
