May Series may Expire Around 7300-7400
Markets have now digested the euphoria and optimism surrounding BJP-led NDA govt’s clean sweep at the elections and the subsequent swearing in of its PM elect Narendra Modi. The focus now shifts to policy announcements across various portfolios that will keep the participants hooked on to markets.
In the last few sessions, F&O market internals suggest long unwinding in Nifty futures and long buildup in Bank Nifty futures. As per options OI distribution, we expect May series expiry to be between 7300 and 7400. Nifty OI put-call ratio is up from 0.88 to 0.91.
Nifty rollovers stand at 45% as compared to the average rollover of 47% (last three series), but on a higher base. Options IVs continue to see a sharp decline post the election results, which is very much in line with our expectations. Going forward, we believe that the VIX index can correct further and test 14% levels.
After being net buyers for major part of the month, FIIs have turned cautious and are now booking profits as seen in the past few sessions.
After a breakout to new all-time highs on mid-cap index, we believe the opportunity is greater here and, hence, expect strong outperformance. It is recommended to take longs in IDFC 150 call option in the range of ` 5-6 for a target of ` 12-15 and suggest keeping a stop-loss of ` 2. One can also look to buy Tech Mahindra June futures at 1875 with a stop loss of 1805 and target of 2075.