The Nifty closed convincingly above 4,560 at 4,643 and is expected to close above 4,700 in a day or two. The put writers, expecting the Nifty to breach 4,700 before expiry of the August futures, were seen writing 4,600-4,700 strike puts. The 4,600 put added an open interest (OI) of 1.71 million shares while OI in the 4,700 put shot up by 157 per cent or 1.21 million shares.
The call option traders were seen unwinding their short positions at 4,600 and 4,700 strikes calls. The OI in the 4,600 call declined 30 per cent while the 4,700 call added an OI of 176,400 shares despite total trading volume of 10.54 million shares. This means options traders expect the Nifty to hold the 4,600 level and also close above 4,700 in this expiry.
Siddhartha Bhamre, derivative and equity analyst at Angel Broking, expects the indices to breach their 52-week highs in the September series. The global cues are conducive to a fresh upside due to positive US economic data and rising crude oil prices.
Though there has been no long build-up recently, short-covering by foreign institutional investors (FIIs) and buying by domestic institutional investors (DIIs) in the cash segment may help the Nifty close above 4,700 in this expiry, says Bhamre.
However, technical analyst Kamalesh Langote of vfmdirect.com expects the Nifty to revisit 4,500 before this expiry as the rally has not been backed by good volumes. But rollovers remain healthy as the August futures shed an OI of 2.98 million shares while the September futures added an OI of 3.15 million shares, which indicates that traders have rolled over their long positions.
The Instanex DIIs index and the FIIs index of 15 stocks indicates that DIIs and FIIs were buying selectively. These institutions are expected to have bought shares of HDFC, ICICI Bank, Hindustan Unilever, ITC and Larsen & Toubro as these index components have outperformed the benchmark indices.