Market trends over the past few months have been nothing short of euphoric, with the Nifty 50 benchmark index settling the most recent four consecutive derivatives streaks with net gains.
At the same time, the index rallied more than 14% to a new all-time high, stopping at a distance near the 20,000 mark.
It’s been rare to have four consecutive strong gains in the past, and there are concerns that the index may eventually run out of luck in the August F&O streak.
However, the rotating positions of the August F&O series suggest there may be more fuel left on this trip.
According to data from Nuvama Quantitative & Alternative Research, Nifty’s futures sales are at 84%, compared with an average of 70% over the previous three series. According to the report, bearings across the market are also at 93%, matching the average bearing rate of the past three product series of 93%.
FII position raises some concerns
Some caution is seen in Foreign Institutional Investors (FII) refinances, anticipating consolidations and profit taking in the August series.
“During the July F&O series, the FII futures buy/sell ratio was above 2.50x. However, at the start of the August F&O series, it was at 1.41x because they dropped some positions. long positions and some more short positions,” a YES Stock Report featured.
“The long-term FII rate is now 59%, compared to 66% in the previous series. This means there will be more hedging short positions going into the August series,” Religare Broking said in its report.
However, open interest for the August F&O series is around Rs 25.7 lakh higher than the previous series. This indicates the addition of new overall long positions in the index and shows that overall sentiment remains in favor of the bulls.
Long position near support area
Even among the added buy positions, Motilal Oswal Financial Services Ltd (MOFSL) has shown that some of these have been added in areas of support that offer a good base and could hold. for the developed market in August.
Viraj Vyas, technical and derivatives analyst at Ashik Stock Broking, said: pointed out in his report. Additionally, the average strike price for August futures is around 19,700, which Religare Broking predicts will act as a mainstay for the month. Given these factors, Religare Broking believes that until Nifty trades above 19,700, resistance might just stay near the 20,200-20,300 level.
The broker added: “We expect Nifty to find strong support at 19,300-19.400 for the August series, while 19,300-20,300 is the expected range.”
Vyas also expects the long-term uptrend to continue and thinks any decline in Nifty towards 19,000 is likely to be bought.
All in all, it looks like Nifty’s journey to all-time highs will also continue in the August F&O Series. This time around, however, the ride will be full of profit-booking potholes.
In terms of sectors, most sectors such as automotive and auto accessories, banking-private and PSU, finance, metals, capital goods, consumer goods, media, oil and gas, electricity, pharmaceutical and healthcare will work well. On the other hand, infrastructure, fertilizers and chemicals, and textiles are expected to remain under pressure.
