F&O: Nifty trade may remain range-bound

The Nifty June series’ open interest is about 2.83 crore shares, slightly greater than the open interest of the May series on the first Tuesday level of 2.78 crore shares.

Overall rollover data indicate the relatively poor level of participation from market participants. However, global cues will continue to influence domestic indices.

A move below the lower support of 4900 may see the index decline to 4700 levels. The Nifty basis remained in the discount and finally closed at a discount of 30 points. However, 15 points from it can be attributed to declared dividends which go ex-dividend in June. Put-call ratio of open interest increased and closing at 1.36 levels, indicating put writing in OTM strikes. Options’ open interest saw an addition of positions in OTM strikes.

The option concentration shifted to the 5100-strike call option with an open interest of above 58 lakh shares followed by 4800-strike put option with above 58 lakh shares in open interest. Above option concentration indicates toward the range of 4800-5100 in the near term.

The implied volatility (IV) of call options increased and closed higher at 26.50% on Tuesday, while the average IV of put options ended at 28.65% indicating some buying interest in ATM put options.

The Nifty is expected to remain in the range of 4800-5100 and only a breach below this range will drag the index to lower support of 4700. Sectorally realty and metals stocks observed short positions, while banking and sugar has seen long unwinding and Fertiliser stocks has seen long addition.

By Nitin Murarka, Head, Derivative Strategy, SMC Global.