Going forward, the focus will be on the upcoming monetary policy on 3rd June and then Union budget which is likely to be presented during 1st week of July14. In the interim, key benchmark indices will remain rangebound, however, we may see sector/stock specific action depending on various signals emanating from govt and company specific event. Indian equity market has entered into the long term bull market and its buy on dip market. We recommend investors to take advantage of volatility and start participating in the equity market by focusing on cyclicals.
Rolls in NIFTY futures higher than last month with NIFTY rolls at 59.7% (last month 58.6%), lower than 6-month average of 62.6%, however in value terms, it is at 11650 Cr. versus 17405 Cr. (NIFTY was up by 6% in last series, number of shares also have decreased to 160 lakh versus 254 lakh shares).
On other hand, market wide roll was flat at 78% (last month 76%) in value terms 55985 Cr which is more than last month 52206 Cr., (in share terms it saw decrease, along with price action as some individual stocks have increased 10-15% on price chart) leading to overall position lower 67635 Cr Vs 69611 Cr. (decline M-o-M) in futures positions Roll Cost is at 0.59 which is lower than last month of 0.96, in line with 12mth avg. of 0.59, withNIFTY cost itself at 0.41 (which is lower than 0.55 avg. of 6 months, and last month 0.85). Also, NIFTY/STOCK Fut. ratio has decrease to 0.20 (last month 0.33), implies market participants have increased bets on Individual stocks, implying market participants feel NIFTY may consolidate.
Nifty front PCR_OI opened below 1 at 0.68 (below last month 0.88, also less than 6mth Avg. 1.02.); with 7500 CE havinghighest OI across options as 42.4 lakh, (9.23 lakh shares add on Thursday), implying CE writers are convinced NIFTY will find resistance around 7450-7500; on support side PE OI is at 7000 and 6800 31 lakh shares each, (Thursday 7000 add 4.9 and 6800 14.1 lakh Shares add), implying 6970-7030 will be crucial support zone; Index options positions have decreased to61208 Cr (last month 102368 Cr) however if we take premium in consideration, Options have increase as market participants clearly placing bets on VIX which has given break down below 23.16, till it remains below 23.16 NIFTY will continue to consolidate, We feel Nifty trading range for this series would be 6970-7450, as we enter the JUNE Series.
Among stock futures positions have declined in Mid Caps, implying traders booking profits as we approach event, with some of traders favourite sector showing drop in roll (though base has become bigger); few stocks however showing more strength than others; sectors that can outperform Index in the JUNE Series BANKING (Mid Cap PSU Banks), AUTO, IT (barring INFY), INFRASTRUCTURE, REALTY C-o-C improve; On other hand aggressive Shorts rolled CAP.GOODS, CEMENT, FMCG, MEDIA, METALS, OIL & GAS; Individual stock picking required.