Nifty October futures are currently trading at a premium of 165 points, as on the expected lines index made the record highs of 26250 and saw profit taking thereafter. In the first weekly expiry of the October series, there was a marginal reduction in open interest (OI) in benchmark futures.
A fresh support base for Nifty is now at 25,700- 800 and traders can hold positional longs with a stop loss at these levels. For fresh longs traders should wait and watch if the index is well holding above the 25700-800 zone.
On the banking front one must keep an eye on the 52600-800 zone as it has strong support in these areas. As earlier private banks were outperforming but now it seems that the tables have been turned. Now we’re seeing pressure from across the board, so one should stay light as the break below 52600-800 may result in index drifting to 52000 levels.
In terms of FII activity, net long exposure in index futures for the month has further increased to 80%. As the long exposure of FII are on the extreme side one should not be looking for aggressive long trades and stay light.
On the sectoral front, we anticipate continued outperformance from Infra, Healthcare, and Metal sectors. These sectors have shown resilience and strength amid the profit taking in the benchmark.
In summary, one should strictly follow the mentioned level and one should avoid aggressive long positions as of now. One can hedge their portfolios buy buying the month end put options.
Sell 25600 pe at 38
Sell 25950 ce at 33
Spread 71 Tgt 10 SL 120
(About The Author: Ravi Singh, SVP- Retail Research, Religare Broking)
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