F&O: Market bracing for Budget, long rollover shows no aggression

By Chandan Taparia

The Nifty50 index failed to continue the positive momentum and closed on a negative note after positive close for six consecutive sessions.

It failed to surpass the previous day’s high of 11,110 and witnessed profit booking, which took it towards the 11,000 mark before it finally closed with a loss of around 16 points.


The index formed a ‘Hanging Man’ candle on the daily chart, which indicated that supply pressure was seen at higher levels, but decline got bought into.

Now the index has to decisively move above the 11,111 level to extend the rally towards 11,200 and 11,250 levels, while holding below 10,990 could see it decline towards the 10,888 level.

On the options front, OI concentration was scattered at different strike prices as the February F&O series is going to see a major event.

However maximum Put open interest stood at 10,500 followed by 10,400 and 10,800, while maximum Call OI was at 10,800 and 11,500 levels. No significant OI concentration was observed at any individual strike price and the option band signified a volatile move in the market over the next few sessions.

India VIX slipped 2.95 per cent to 17.50. The VIX saw a 25.23 per cent spike this week and hit a 14-month high since November 2016. Higher volatility signals possible swings in the market, but the major trend remains intact as the index holds up well to major support zones.

Nifty futures saw around 63.50 per cent rollover from January to February series on a provisional basis. The rollover picked up in the last trading session of the January series, and longs got rolled to next series but lower roll cost suggests aggression of longs was missing.

Bank Nifty remained volatile as it fell to 27,151, but recovered from the lows to hit a new lifetime high of 27,522. It formed a bullish pin bar candle and the momentum was seen in most of private bank stocks. Now it has to continue to hold above 27,000 to extend its move towards 27,750 and then 28,000 levels, while on the downside, major support exists at 26,850 level.

Bank Nifty futures saw around 69 per cent rollovers from January to February series on a provisional basis.

Nifty February futures closed in the negative with a loss of 0.41 per cent at 11,060. February series futures closed at a discount to the spot price and roll cost turned negative towards the end of the day. Long buildup was seen in select private banks, metals and NBFC stocks while shorts were seen in PSU banks, auto and IT stocks.

(Chandan Taparia is Technical & Derivative Analyst at Motilal Oswal Securities. Investors are advised to consult financial advisers before taking an investment calls based on these observations)