Nifty may trade in 15700-16000 range in new July F&O series; short covering rally expected in near term

By Sameet Chavan

We had a flat start to the monthly expiry session on Thursday, taking mixed global cues into consideration. In the initial hour, the market surged a bit to challenge the 15900 mark. However, once again bulls became nervous at higher levels, which resulted in some profit booking to wipe off gains. During the remaining part of the session, the Nifty consolidated in a small range to eventually conclude the June expiry convincingly above 15700.

During this week, we witnessed lethargic moves in key indices as we can see the trading range for Nifty shrinking to merely 180 – 200 points. All this while, despite multiple attempts, bulls have successfully managed to defend the key support of 15700. On the other hand, 15900 – 16000 remains a sturdy wall. Now as we are stepping into a new series, 15700 – 16000 would be seen as immediate range and a decisive breakout on either side should dictate the near term direction. 

We reckon, we are likely to see the market coming out of this slumber phase soon (hopeful of happening it upwards) and hence, traders should keep a close tab on this development. Until then it’s better to focus on individual themes and it’s important to identify apt candidates within the same in order to find better trading opportunities.

FIIs were net sellers in the cash market segment to the tune of Rs. 1138 crores. Simultaneously, in Index futures, they sold worth Rs. 1297 crores with a fall in open interest, indicating a long unwinding. Rollover in Nifty and Bank Nifty stood at 74.81% and 87.42%, respectively. In Nifty, the piling up of position is visible at the 15500 to 15800 Put strikes in the options segment, which indicates the series of the support zone. 

While on the contrary, a considerable OI concentration is built on the 16000 call strike, breaching which a short covering rally is likely to be seen in the near term. Considering the above data, some tentativeness could be sensed in the market.

(Sameet Chavan is a Chief Analyst-Technical and Derivatives at Angel One. Views expressed are the author’s own. Please consult your financial advisor before investing.)