Mr. Ruchit Jain (Equity Technical Analyst, Angel Broking):
- Rollover in indices higher than average
- Short Covering lifts benchmark higher
- FII's 'Long Short Ratio' at 63%
- Index trims losses before expiry
- Support for Nifty at 9200
- 'Buy on dips' strategy recommended
- Nifty futures in discount due to dividends
"May series started with a gap down opening in Nifty and the index corrected gradually throughout the series to almost test the 8800 mark. Nifty consolidated in last couple of weeks whereas Bank Nifty continued the downmove and underperformed the Nifty index. However, in last couple of sessions before expiry, the indices pulled back higher to end the series around 9500, with a loss of 3.75 percent compared to last expiry.
In last couple of sessions, the underperforming Banking space witnessed short covering which resulted in a sharp upmove in the indices. Stocks from the F&O space witnessed good momentum due to a combination of short covering and fresh long formations. The rollover in Nifty is at 75.67% v/s 3-month average of 69.70 percent while in Bank Nifty it is at 81.13% v/s its average of 72.64 percent. Higher than average rollover with positive momentum in the last couple of sessions indicate long rollover which is a positive sign. FII's squared off much of their index futures short positions and their 'Long Short Ratio' at the start of new series is at 63%. The options data hints immediate support for Nifty around the 9200 mark followed by 9000. Looking at the data, we are of the opinion that the index is likely to witness buying interest on declines and hence traders should use a buy on dip strategy and trade with a positive bias.he March series was a relief for the bulls as Nifty recovered in the first couple of weeks of the month. Post some consolidation, the index resumed the momentum during the expiry week and ended well above 9800 to register gains of 14 percent over previous expiry's close.
Last but certainly not the least, since last couple of days we have been receiving many queries on why Nifty future is trading at a big discount. In our sense, it is more to do with some of the index heavyweights going ex-dividend in June month and hence, it is already been discounted in the index future."