F&O: Bulls tighten the grip despite expiry

With Nifty back at 8k, experts see more upside

Trading sessions on Wednesday and Thursday were nothing short of jubilation for the stock market. With the bell-weather BSE Sensex leaping by about 1,100 points in just two days and coinciding with Modi's two-year tenure as prime minister, the confidence of bulls grew stronger. In fact, for most of the May series the broader indices moved in a range. For instance, Nifty hovered between 7,700 and 7,900.

"Right from the beginning of the May series rollover costs were low. But it gradually picked up as the long players got aggressive in the market" says Ravi Sharma, manager- institutional equity derivatives, Prabhudas Lilladher. He points out that the Nifty for a long time took support at its 55 days moving average of 7,700 levels. "The global rally that took place last week and news on monsoon domestically helped Nifty move beyond this range", he adds.

Jayant Manglik, president- retail distribution at Religare Securities echoes the same. According to him better than expected results of select index majors pushed the markets higher in early hours apart from appreciation in rupee against the US dollar. "Pace of surge caught the bears completely by surprise before the derivative expiry, which led to short covering across the board and aided index to close around the day's high on Thursday", adds Manglik.

S Hariharan, head - sales trading (Institutional Equities), Emkay Global Financial says that through the month of May, FII positioning increased on the short side, while retail has been adding to their longs. "FIIs have now turned buyers over the past two days."

Given the volatility in trade until a few weeks back, Sharma has wide target range of 7,800 - 8,300 for the fresh F&O series. 8,300 is also the Nifty target which Sharma has for 2016. "While my target is wide, I am biased on the higher side of the spectrum as we have regained to the 8,000 level in Nifty after many months", he says.