Bank Nifty support near 45,200; Nifty trade sentiment is ‘buy on dips’

By Manojh Vayalar

The July series Nifty futures started with a premium of around 95 points for the current month. For the Nifty futures, FII maintained around 40% short positions, lower than the last month’s series, which is now currently around 30% shorts. The index witnessed a long buildup rally since the start of this series. We believe that a dip in the Index could be an opportunity to enter into longs and hence the Buy on Dips is the trade sentiment in Nifty.

FIIs started this series with Long’s position in Index of around 66% vs 34% index shorts last month which are currently around 30% as of yesterday. For the Nifty, the IVs for OUT-OF-THE-MONEY options stayed at around 12-12.5 levels in yesterday’s trade implying call unwinding at these strikes. For the Bank Nifty 27th July, 45,000 strike call option has highest open interest implying resistance around 46,000. Bank Nifty has strong support near 45,200 levels. For the Nifty, the VWAP (Volume weighted average price) of Nifty July Futures is around 19,500 implying that to be the support. Above this, Nifty is to be positively biased for the short term towards 20,000.

With FIIs having lower short positions in the Index, currently lesser than the last month, we expect Nifty could face some resistance only at the higher levels of 20,000 positionally. The ratio between Bank Nifty and Nifty is currently at 2.31, this ratio has a support at 2.28 and resistance near 2.37. We expect Bank Nifty to outperform. Sector-wise, Banks, IT, FMCG and Automobile look positive in Nifty.

Nifty Bull Call Spread:

Buy 27th July 19,800 CE@ 120;

Sell 27th July 20,000 CE @ 50;

Spread @ 70;

Stoploss @ 20;

Target @ 150.

(Manojh Vayalar, VP-Derivatives, Religare Broking Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Mcap of three of top-10 most-valued firms erodes by Rs 82,082.91 cr; Reliance biggest laggard

The combined market valuation of three of the top-10 most valued firms eroded by Rs 82,082.91 crore last week, with Reliance Industries taking the biggest hit.

From the top-10 pack, Reliance Industries, HDFC Bank and State Bank of India were the three laggards, while Tata Consultancy Services (TCS), ICICI Bank, Hindustan Unilever, Infosys, ITC, Bharti Airtel and Bajaj Finance were the gainers.

HDFC Bank’s valuation eroded by Rs 20,893.12 crore to Rs 11,81,835.08 crore and that of State Bank of India declined by Rs 2,498.89 crore to Rs 5,08,926 crore. However, the market capitalisation (mcap) of Bajaj Finance jumped Rs 21,025.39 crore to Rs 4,36,788.86 crore.

The valuation of ICICI Bank rallied Rs 13,716.34 crore to Rs 6,79,267.17 crore and that of Infosys climbed Rs 13,199.82 crore to Rs 5,89,579.08 crore. Bharti Airtel added Rs 9,731.21 crore taking its mcap to Rs 4,88,461.91 crore.

The mcap of TCS advanced Rs 4,738.47 crore to Rs 12,36,978.91 crore and that of Hindustan Unilever gained Rs 2,972.23 crore to Rs 6,03,222.31 crore. The market valuation of ITC climbed Rs 2,430.64 crore to Rs 5,53,251.90 crore.

Reliance Industries continued to rule the top-10 most valued firms chart followed by TCS, HDFC Bank, ICICI Bank, Hindustan Unilever, Infosys, ITC, State Bank of India, Bharti Airtel and Bajaj Finance.