‘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

The Economic Times - - Companies: Pursuit Of Profit -

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.

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