Looking at the options build of August series, levels of 10,000 will remain important and sustainability above these levels is important for any further up move. In this scenario, some consolidation below 10000 levels is expected.
The open interest in Nifty futures at 16.5 million shares is lowest seen since January 2017 despite having one of the highest roll spread since November 2016 suggesting closure of positions during the settlement.
The effective premium in Nifty is close to 44 points (excluding dividend of 13 points in the August series) is also on the higher side primarily due to lack of short rollover.
Historically, high Nifty premium does not bode well for the markets but looking at the long series and Nifty trading near 10,000 levels, current premium can’t be justified.
Looking at the options build of August series, levels of 10,000 will remain important and sustainability above these levels is important for any further up move. In this scenario, some consolidation below 10000 levels is expected.
Nifty has started the August series near their highest Call base. While the July up move can be largely attributed to the short covering among heavyweights due to P-Note ban, a continuation of the momentum will require some fresh triggers.
Until that happens a round of profit booking can be expected from its highest Call base.
In the current consolidation, underperforming sectors have started performing on the back of short covering. This pattern is likely to continue in coming weeks.
In the case of profit booking in the outperforming spaces, underperforming stocks could take the lead limiting the market declines.
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