Traders cautious ahead of expiry

F&O OUTLOOK

A weak rollover of the Nifty futures’ December series three days ahead of the expiry indicates that derivatives traders seem to be cautious about the markets. The rollovers were to the tune of 11.25 million shares, substantially lower compared with those of 22.27 million shares in the November series during the same period.

Trading in the Nifty options suggests that the index has strong support at the 2,700-level and resistance at the 2800-level as options traders were selling 2,700 strike puts and writing 2,800 strike calls. Also, buyers of put options were seen selling 2,500-2,600 strike puts as traders expect that the index may not fall below 2,600 on or before the expiry of the current contract on November 27.

On Monday, the Nifty maintained its technical support of 2,700 and closed above it from the day’s low of 2,633. Technical analysts expect the index to move upwards, with the next resistance at 2,810, which is the 20-DMA (daily moving average). The Bloomberg data suggest that Nifty November and December futures witnessed strong buying at lower levels, with almost 35 per cent trades taking place in the last 60 minutes.

According to Ashish Shroff, a technical analyst at Ambit Capital, technical studies like the price pattern and momentum indicators suggest that once the Nifty closes above the 20-DMA, it will post a sharp rise towards 3,100. He expects the index to find strong support at 2,600 and resistance above the 2,780-level.

Kamlesh Langote, a technical analyst at vfmdirect.com, says that the Nifty will consolidate above 2,740 as hourly charts will give a buy signal with immediate resistance at 2,800. As regards the end-of-day (EOD) charts, a breakout above 2,740 would mean a breakout above the falling trendline and can impart strength up to 2,950-3,000 in the next few days, said Langote.