Bearish Bets On Nifty Have Rolled Over To June, Says Analyst
The benchmark equity indices erased most of their early losses to end marginally higher on Friday.
Derivatives data based on Thursday's Nifty contract expiry suggests a rollover of bearish bets from the May to June series, according to Soni Patnaik, assistant vice president at JM Financial Services Ltd.
"Thursday's expiry rollover shows Nifty has taken bets on the shorter side. Some bearish bets have been rolled over from the May to June series," Patnaik told NDTV Profit. "Not the best of idea to go ahead and buy a call option. It will be wiser to hedge positions."
Nifty's immediate resistance stands at 22,800, according to her. "A lot of aggressive call writing is taking place for 23,000; that will act as strong resistance. Short covering will be very difficult."
On the downside, the index can retest its support level of 22,000. Volatility will remain for the next 2–3 trading days, she said.
The benchmark equity indices erased most of their early losses to end marginally higher on Friday ahead of the gross domestic product data release later in the day. On a weekly basis, the Nifty recorded its worst fall since the week ended May 10.
The NSE Nifty 50 closed 0.19% or 42.05 points higher at 22,530.70, while the S&P BSE Sensex ended 0.10% or 75.71 points up at 73,961.31.
During the day, the Nifty gained as much as 0.73% to 22,653.75 and the Sensex rose 0.8% to 74,478.89.
Power companies, specifically Tata Power Co., will be favourable as it is one of the few sectors showing a strong long rollover from May to June series, she said.
"Regional diversions, marginally low voter turnout and strong resistance in the current range are prompting investors to adopt a cautious stance," said Vinod Nair, head of research at Geojit Financial Services Ltd. "They are aligning their investments towards fundamentally strong sectors and stocks to safeguard against any abrupt reactions in the market."
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