By Ravi Singh
The benchmark indices are currently on the neutral to negative side, with no fresh positions recommended unless the Nifty trades above the 24,450 mark. Sustained positive market momentum is likely only if the Nifty manages to close above 24,450. As of now, the highest OI on Nifty November monthly options is concentrated at the 24,000 PE and 25,000 CE strikes. Specifically, the 25,000 CE has an open interest of approximately 2.47 million contracts, while the 24,000 PE shows around 3.25 million contracts. In terms of market flows, FIIs have been net sellers in the cash segment, offloading approximately Rs 92,000 crore, which could be signalling some caution or risk-off sentiment in the broader market.
Turning to Bank Nifty, futures have witnessed a rollover of around 69%. This is accompanied by a reduction in open interest of approximately 450,000 contracts relative to the previous series. This decline suggests a lack of interest from participants in carrying over positions in Bank Nifty into the new series, possibly driven by anticipation of uncertain events or a more cautious outlook. Notably, Bank Nifty has underperformed relative to the broader benchmark indices for the last two series, and this trend could persist in the near term.
Key levels to watch
Until the Nifty trades below the 24,450-24,550 range on a spot basis, the index remains in a “SELL ON RISE” mode for the first weekly expiry of the November series. We anticipate strong resistance in the 24,450-24,550 zone, while immediate support is expected around the 23,650-23,750 levels. Thus, the range for Nifty during the first fortnight of November is likely to be between 23,350 and 24,500.
As for the Bank Nifty, the key support levels are seen around the 50,300-50,500 range. We expect Bank Nifty to trade within the 50,000-52,500 range during the first half of November. However, a long position could be considered if the index sustains above the 52,000 level for a few sessions, signalling a potential shift in momentum.
Strategy for the week
Nifty Bear Put Spread:
Buy Nifty Put 23950 @ 179.10
Sell Nifty Put 23750 @ 108.50
Spread 70.60, Stop Loss 28, Target 130 (Expiry 07 NOV)
(Disclaimer: Ravi Singh is the Senior Vice President of Retail Research at Religare Broking Limited.
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