Little scope for upside now

F&O OUTLOOK

Benchmark indices and key index heavyweights have recovered sharply from their lows in the last couple of days and hence upside from the current level will be limited.

The Nifty PCR (put-call ratio) at 4200 strike is comfortably higher at 1.55, suggesting support for the index while PCR at 4400 strike is extremely low at 0.38, indicating strong resistance for the Nifty.

The market is trading at a crucial level and it is very difficult to predict upsides as the Nifty has already recovered by 12.3 per cent from Thursday’s low, says Siddhartha Bhamre, equity and derivative analyst at Angel Broking. Recovery in last two days has been on account of short covering but no fresh long build-up is seen.

The Nifty could move up by 100-150 points from the current levels with strong resistance seen at 4400 levels. The SGX Nifty traded at 4377 on the Singapore Stock Exchange against an NSE close of 4273, indicating strong opening on Monday.

In the derivatives segment, trading pattern of FIIs also suggests limited upside. Though FIIs have covered some short position in index futures, they continue to hold substantial shorts created earlier. Also they have hedged their short build-up in index futures through buying of put options. In stocks futures, FIIs were net buyers this week, but they continue with their earlier shorts build-up.

With only four days left for the expiry of the September series, rollovers in the Nifty October futures were higher at 6.80 million shares compared with 5.98 million last month. However, rollovers in the August futures were at a premium of seven points, while current rollovers were at a premium of 26 points. This may augur well for the market, but it is very difficult to indicate rolled positions were short or long build-up.