F&O Watch: Nifty must hold above 7,350 for the next upmove

After witnessing huge selling pressure during the month, amid high volatility, the January derivative contracts expired today and the Nifty February series was seen at 27 points premium to the spot market. Meanwhile, the Nifty has to hold above 7,350 for the next upmove.

"Nifty January series settled with loss of 6.50% at 7425 levels. In this series we have seen a sharp sell off from 7972 to 7241 for first four week of the series and volatility index surged from 13 to 22.11 levels. It closed the series below its VWAP of 7560 zones. During the settlement day it traded in a narrow range of 7410 to 7470 zones as option writers were keeping the market in their grip," said Chandan Taparia, Derivative Analyst - Equity Research, Anand Rathi

On provisional basis rollovers of Nifty future were around 69% which is lower than the previous series but in line with the last six month average.

The immediate trend is negative but the way it has made a short term bottom near to 7250 zones and holding the gains above 7350 zones from last three sessions, it may continue to witness a bounce back move in the beginning of February series.

Bank Nifty has seen rollover of around 69% which is almost in line to the average.

In the mid-cap segment media stocks such as Zee, Dish TV and TV18 were among the most active.

Positive rollovers were also seen in stocks such as JSW Steel, Ashok Leyland, Biocon, Havells and Voltas among others.

On the other hand, negative rollovers ( open interest additions with negative price flow) was seen in mid-cap state-owned banks such as Syndicate Bank and Allahabad Bank.

OUTLOOK

With the markets still reeling under a bearish phase the Nifty has to hold on to crucial support levels to rebound from current levels or else could see a further downside from current levels.

"The Nifty has to hold above 7350 zones to witness an up move towards next crucial hurdle of 7539 and 7675 zones ahead of next trigger from Budget 2016, while holding below 7300 zones may fade out the hope of bounce back move and index may drift down towards recent low of 7250 then 7100 zones. Bears are still intact and keeping their grip but the way most of the heavy weights are trading at their oversold territory a bounce move cannot be ruled out," Taparia said.