The last week saw expiry of the April derivatives contracts. The Indian markets came off from a holiday mood (there were two holidays in the earlier week) and started with a gain of over 1.7% on Monday.
The markets witnessed strong rollovers into the May series, which indicates that the momentum, which had set in April, is likely to continue. The Nifty saw almost 70% of its positions getting rolled while the market rollovers were well over 85%. Among stocks, Hindalco witnessed maximum rollovers, at around 92%.
The rollover cost improved significantly across the board as compared to the last expiry. This is primarily because of the optimism that has come back into the market. 4950 was a crucial level (Nifty had fallen thrice from these levels during the last two months) and the Nifty managed to break it. It closed at around 5000 levels for the April expiry.
The best part about last week was that the mid-caps drew significant attention from investors. Strong buildup was seen in that space. This is another factor, which indicates that investor confidence is coming back into the markets.
The Nifty April futures traded at a premium at most times and the calendar spreads turned positive, suggesting that the rollovers were mostly towards the long side.
The last trading session for the week saw the Nifty gaining over 2.5% to close at 5111. The markets witnessed a huge build-up in telecom stocks after the announcement of Bharti's results. Bharti Airtel was up 9% for the day with Reliance Communications also registering a 8% gain. In the banking space, ICICI Bank and HDFC witnessed upmoves after the inflation numbers were announced.
Going forward, we believe that Nifty is all set to cross the 5200-mark this week. Sectors like metals and power are poised to give strong moves. The metal stocks have witnessed significant long rollovers, which is very promising. The power stocks on the other hand had witnessed weaker rollovers. This means shorts have got expired last month and the stocks are likely to bottom out. Other sectors that are likely to witness an upmove are FMCG and construction.
Banking stocks, which have had a good run after the result announcements, are likely to witness some profit-taking before the quarterly monetary policy on April 30.
On the options front, the Nifty 5000 calls added significant long positions as the open interest rose sharply along with rise in implied volatility. However, call writing has been severe in the 5200 and 5300 Nifty strikes. The 5200 level can therefore be a strong resistance for Nifty.
On the puts front, put writing has been witnessed in the Nifty 4800 and 4900 strikes, indicating support at those levels. On the stock options front, strong buildups have been witnessed in the ICICI Bank 900 call and put.
This suggests a straddle positions getting built with expectations of a sharp movement in the stock ahead of the monetary policy.
The markets witnessed strong rollovers into the May series, which indicates that the momentum, which had set in April, is likely to continue. The Nifty saw almost 70% of its positions getting rolled while the market rollovers were well over 85%. Among stocks, Hindalco witnessed maximum rollovers, at around 92%.
The rollover cost improved significantly across the board as compared to the last expiry. This is primarily because of the optimism that has come back into the market. 4950 was a crucial level (Nifty had fallen thrice from these levels during the last two months) and the Nifty managed to break it. It closed at around 5000 levels for the April expiry.
The best part about last week was that the mid-caps drew significant attention from investors. Strong buildup was seen in that space. This is another factor, which indicates that investor confidence is coming back into the markets.
The Nifty April futures traded at a premium at most times and the calendar spreads turned positive, suggesting that the rollovers were mostly towards the long side.
The last trading session for the week saw the Nifty gaining over 2.5% to close at 5111. The markets witnessed a huge build-up in telecom stocks after the announcement of Bharti's results. Bharti Airtel was up 9% for the day with Reliance Communications also registering a 8% gain. In the banking space, ICICI Bank and HDFC witnessed upmoves after the inflation numbers were announced.
Going forward, we believe that Nifty is all set to cross the 5200-mark this week. Sectors like metals and power are poised to give strong moves. The metal stocks have witnessed significant long rollovers, which is very promising. The power stocks on the other hand had witnessed weaker rollovers. This means shorts have got expired last month and the stocks are likely to bottom out. Other sectors that are likely to witness an upmove are FMCG and construction.
Banking stocks, which have had a good run after the result announcements, are likely to witness some profit-taking before the quarterly monetary policy on April 30.
On the options front, the Nifty 5000 calls added significant long positions as the open interest rose sharply along with rise in implied volatility. However, call writing has been severe in the 5200 and 5300 Nifty strikes. The 5200 level can therefore be a strong resistance for Nifty.
On the puts front, put writing has been witnessed in the Nifty 4800 and 4900 strikes, indicating support at those levels. On the stock options front, strong buildups have been witnessed in the ICICI Bank 900 call and put.
This suggests a straddle positions getting built with expectations of a sharp movement in the stock ahead of the monetary policy.
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