F&O Insights: Aug expiry, RIL AGM to guide Nifty; India Cements exit today

Derivative market update for Thursday, August 29: The 10-day Nifty rally is under threat amid weak global cues; Monthly F&O expiry and RIL AGM may add to the market volatility.

F&O Outlook for August 29: The Nifty scaled a new high at 25,130 and ended higher for the 10th straight trading session on Wednesday backed by strong domestic flows. On Thursday, the monthly futures & options expiry, global market trends and announcements from index heavyweight - Reliance Industries shall guide the Nifty trend.

The Reliance AGM is scheduled at 2 PM, and the stock being an index heavyweight is likely to impact the trend on the Sensex and Nifty today. Here are the key levels to watch out for Reliance stock.

Meanwhile, the Nifty September futures gained 0.1 per cent yesterday to settle at 25,162, a premium of 110 points as against the spot Nifty close of 25,052. The premium dipped by 6-odd points on a day-to-day basis. The open interest (OI) rose by 48.9 per cent, with an addition of 1.15 lakh contracts largely on account of FIIs buying.

 

Technically, the Nifty on a daily scale has formed a spinning top candlestick pattern. As per this pattern, as long as the index remains below 25,130 short term consolidation or profit taking could be possible, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates in a note.

However, if the Nifty sustains above the 25,130 levels, then this pattern will be negated and the rally could extend towards the 25,300-25,500 levels. On the downside, the 9-Day Exponential Moving Average (DEMA), positioned near 24,820, will act as immediate support for the Nifty in the short term, the analyst added.

On Wednesday, the Bank Nifty September futures declined 0.2 per cent to 51,429, while the premium rose from Rs 257 to Rs 284 per contract. Amid the ongoing rollovers, a total of 58,588 fresh contracts were added to the OI.

Key Insights from Nifty, Bank Nifty Options data:

The Nifty options market remains bullish, with more Puts being written than Calls as the index continues to hold above the 25,000 level. Significant open interest at the 25,000 Put (1.19 crore contracts) and the 25,500 Call (91.12 lakh contracts) points to a narrow range battle between buyers and sellers, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities in a note.

The Put-Call Ratio (PCR) has slightly increased from 1.11 to 1.12, underscoring the bullish structure dominated by Put writers over the past two trading days. The Max Pain Point at 25,000 strike marks a critical level that could influence the Nifty's near-term movement.

In case of Bank Nifty, significant open interest is noted at the 51,200 Call (1.09 crore contracts) and the 51,100 Put (1.22 crore contracts), with active trading around the 51,300-51,400 Calls and 50,900-51,000 Puts.

The Put-Call Ratio (PCR) has slightly increased from 0.84 to 0.89, reflecting a sideways to bearish sentiment as the index experiences limited follow-up buying and trades mostly sideways, keeping the bulls cautious. The Max Pain Point, concentrated at 51,200 strike, serves as a crucial level to watch, for the potential shifts in the index's direction, the note added.

FII, DII trading activity in F&O - Here's all you need to know about who bought and who sold in the derivatives market on August 28?

As per data from the NSE, FIIs net bought 33,855 contracts of index futures on August 28 for a consideration of Rs 2,102.82 crore. FIIs net bought 36,472 contracts of Nifty futures, while sold 2,169 contracts of Bank Nifty futures and 502 contracts of MidCap Nifty futures.

Pursuant to which, FIIs long-short ratio in index futures jumped to 1.6:1 – this ratio implies that foreign investors now hold more than 3 long positions in index futures for every 2 bets on the short side of trade. The FIIs longs in index futures stood at 61.52 per cent.

Meanwhile, domestic institutional investors (DIIs) too raised their long positions marginally - DIIs index futures long-short ratio rose to 0.59:1; with net longs at 37.37 per cent.

On the other hand, retail traders’ long-short ratio dipped below 1 to 0.86, thus implying retail traders held more than 1 short position for every long trade in index futures as of yesterday.

Bullish & Bearish stocks

Over the last three trading sessions, LTIMindtree, Indian Energy Exchange (IEX), Cholamandalam Investment and Finance Company and National Aluminium have seen the strongest gains in the F&O space. 

IndiaMart Intermesh, Sun TV, RECL, Lupin and Power Finance Corporation (PFC) have been the other bullish stocks, up around 3 per cent.

On the flip side, Ambuja Cements has been a key laggard, down 3.5 per cent in the last three days. Hindustan Aeronautics, Bandhan Bank, Federal Bank, Cummins India, Bharat Electronics, Marico, Coal India, Container Corporation, Canara Bank, Britannia and Adani Enterprises have been the other bearish stocks, down 2-3 per cent each.

Stocks in F&O ban period today

Only 4 out of the 181 derivatives stocks traded in the August series were placed in the F&O ban period for Thursday. 

Bandhan Bank, Granules India, Hindustan Copper and India Cements were the 4 stocks in F&O ban today. India Cement will be removed from the F&O list at the end of the trading session on Thursday.