F&O data hint at 9,037-10,160 range for Nifty

Mumbai: Options traders are baking in a range of 9,037- 10,160 for the Nifty in the current expiry (June 25), with the bias on the upside. That’s an over 11 per cent range from Friday closing of 9,580.3.Both the levels are key as the lower one has acted as a strong support, while 10,160 is the March 13 high from where the market gapped down to 9,588 in the next trading session. It then went on to hit the multi-year low of 7,511 on March 24.Certain analysts, like Rohit Srivastava of IndiaCharts, are betting on the Nifty having a shy at 10,160 to fill the gap left on March 13. Others like Rajesh Palviya of Axis Securities expect the market to reverse after testing 10,000 levels, given the lockdown-induced “economic challenges” and head to 9,040 levels.The range is derived from the value of the 9,600 straddle (call and put of 9,600 strike) of 563 a share. The options expire on June 25. So long as the market trades within the range till expiry, the straddle seller makes money. The straddle buyer will gain only if the market closes below 9,037 or above 10,160 at or before expiry.76127362Indeed, the current series of options pegs 9,000 as key support by way of highest open interest here and 10,000 as the major resistance by the same parameter.Traders should also bear in mind that the market is approaching an overbought zone, as indicated by the open interest put call ratio of 1.41 of the June 25 expiry. A reading above 1.4-1.5 is considered overbought while oversold is anything below 1.Any bet on the Nifty or Bank Nifty should be through spreads, which will minimise losses in case of a contrary move, advises Rajesh Baheti, director, Crosseas Capital. Analysts attribute the rally in global equities to diversion of cheap funds injected by central banks the world over to combat the fallout from Covid-19.Having been net sellers to the tune of 61,973 crore in March and 6,884 crore in April, FIIs have net invested 14,569 crore in May. They were also cumulatively net long index futures by 21,702 contracts on May 29. This indicates their positive sentiment on the market.

from Economic Times https://ift.tt/3dmF7cL