‘Nifty Could Touch 10,200 on Strong Inflows, Better Earnings’
Could take index to 10,500 in Aug, say F&O experts; Option sellers have maximum positions at the 10,100 call and the 10,000 put
Mumbai: A decisive breach of 10,197 could propel the Nifty to 10,500 in the current F&O series while a break below 9,894 could result in the index correcting to 9,748, options data for the August series indicate. However, in the immediate term, derivatives analysts expect the bellwether index to test the 10,200 levels based on strong inflows, better than expected corporate earnings, and hopes of a rate cut by the RBI.
After staging a smart recovery to reconquerthe10,000markonFriday, the Nifty made a record close at 10,077 on Monday, raising analyst hopesof themarketcontinuingwith its record-breaking spree.
“The chances of 10,200-10,250 look brighter in the near term,” said Chandan Taparia, derivatives head of Motilal Oswal Securities. “A break above that could put the Nifty into the 10,500 orbit.”
Analyst hopes are supported by Nifty options data for the current month. Option sellers have built maximumpositionsatthe10,100call and the 10,000 put. The average price per share of the 10,100 call option since the beginning of the current expiry (August 31) was ₹ 97 on Monday. This means the seller will begin to encounter loss once the Nifty breaches 10,197. This will force the sellers to cover their short positions, driving the Nifty higher.
On the flipside, option sellers have sold the maximum puts on Nifty at 10,000 level. The average price per share of this option was ₹ 106, making the seller’s breakeven below which she encounters losses at 9,894. Short covering by sellers could result in a correction till 9,748, options data show.
However, most analysts expect that the odds favour a rise over a fall, which could be underpinned by international crisis or skirmish between India and China who are locked in a border stand-off.
“Most factors support a rise, and this is being reflected by F&O data,” said Aadil Sethna, an independent market consultant. “Inflows through SIP are on average ₹ 4,700 crore each month. On the earnings front,consumer-centric,cementand
JOSE MALHOA, even some infra companies have posted better than expected Q1 numbers, and falling inflation because of good rainfall is indicating a softer interest rate regime ahead.”
On the technical front, analysts don’t expect the Nifty to crack so long as it does not break below the swing high of 9,928. The swing high is the level which the Nifty took to breakaftersevenattemptsonitsway to 10,000 in July.