F&O watch: Bulls slowly losing grip; Nifty50 likely to head lower

Nifty futures are likely to trade in a band of 9,250-9,550 in the June F&O series, experts say

Even as the market zoomed to record high in May series, the rollover positions indicate bulls are slowly losing grip as investors rolled over fewer positions to the June series. While highest call concentration in Nifty50 June futures are at 9,600 strike, put at strike 9,000 has highest open interest, with analysts seeing a broad 9,250-9,600 range for the index in the June series. As the fear gauge India VIX is looking up, they do not rule out any short term correction.  

So far till Tuesday, the rollover percentage of Nifty50 in the May series came in at 39% as compared to the average rollovers of 44% in the last three series, while market-wide rollovers stood at 38% against the three-month average of 41%.

“Rollovers are in line with the expectations, but lower roll cost is not giving any sign of comfort to bulls even after its move to new life time highs,” said Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal Securities. 

The expert advised to take calculated risk for over-leveraged position as India VIX moved up sharply by 8.95% to 12.20 on Tuesday. If VIX holds above 12.50, then short term weakness could be seen in the market, he said.  

India VIX is a volatility index based on prices of Nifty options. 

With investors booking profits in most positions, experts believe the Nifty futures are likely to trade in a band of 9,250-9,550 in the June F&O series.

“The options open interest concentration in June series is at 9600-strike calls with the highest open interest of 23 lakh shares; this is followed by 9500-strike call with open interest of 20 lakhs shares. Among put options, the 9000-strike has highest open interest of 29 lakh shares, followed by 9200-strike put with total open interest of 22 lakh shares,” said Nitin Murarka, Head-Derivatives, SMC Global Securities. 

  

On the Bank Nifty, Murarka sees resistance at around 23,000 levels given the continuous call writing in May series. In the June series, option writers are active at 23,000 and 23,500 strikes, while on the put side, 22000 levels should act as support, he added.

So far, IT, PSU banks and telecom stocks have seen highest rollovers, while positive momentum is expected to continue in IT and PSU banking space in the June series.