The July series expired on a bright note, led by smart gains in IT, realty, banking and FMCG stocks. Reliance Industries and metal stocks were weak. The August futures are expected to open on a strong note and the Nifty is likely to cross the 4,600-mark during early trades with upside resistance at around 4,650 levels.
Rollovers in the August futures were marginally higher at 22.70 million shares compared with 22.19 million shares in the July expiry, but considerably lower compared with 36.1 million shares each in April and May. The August futures’ premium to the spot was around 4-6 points for the entire week, which suggests that bears have covered their shorts during the last couple of trading sessions.
According to Bloomberg data, the August futures witnessed building up of shorts at higher levels as sell and buy side volume accounted for 44 per cent each, while the remaining 12 per cent came from neutral trade. Options traders were seen buying the 4,500 strike call and put of the August series on expectations of a breakout on either side.
The 4,700 call of the August series held the highest open interest among call options, which suggested that the Nifty would see strong resistance on crossing this level. The 4,600 strike call added an open interest of 518,700 shares, mostly through buy-side volume at lower premium and sell-side volume at a higher premium. However, accounting for a premium of Rs 162 for the 4,600 call, we might see strong resistance above the 4,750 level.
