Indian market witnessed high volatility in the past couple of days with aggressive unwinding on index heavyweight stocks.
Highlights for the March series are a) India VIX bottoming near 20 mark with high intraday gyrations seen for index b) Participants reacting to many moving parts, with 10-year US bond yields rallying from 1.3x to 1.75x, sharp gains for dollar index moving back to 92.5 mark, worrisome COVID situation keeping traders on edge c) Aggressive short buildup seen on Bank Nifty with aggregate base open interest gains of around 2 times compared to the previous month.
Rollovers for Nifty and Bank Nifty stood at 82 percent (98 lakh shares) and 88 percent (29 lakh shares), respectively, versus 77 percent (1.04 crore shares) and 77 percent (14 lakh shares), respectively, in the previous month.
There were aggressive short rolls for BankNifty as 29 lakh shares rolled – highest in the last 12 months.
We expect Nifty to find support near 14,200-mark while resistance is visible at 14,800 mark. Going ahead, wild gyration is expected between the levels.
Banking: Heavyweight private banks witnessed long unwinding of positions with aggregate base reducing in likes of Axis Bank and ICICI Bank, while aggressive shorts were seen in select PSU banking names. We expect banking to remain volatile with hint of short covering if Bank Nifty sustain above 33,000, while upside hurdle is visible in the 34,200-34,300 zone.
Oil & Gas: Massive unwinding was seen in oil marketing companies like HPCL and IOC. ONGC & GAIL lost significant open interest compared to the previous month, indicating supply pressure on every rise seen on the stocks.
FMCG: Select stocks witnessed short covering. HUL & ITC saw huge short covering during the series with ITC’s aggregate base lower by around 3.5 crore shares during the series, while as traction on charts is picking up in the space, we expect round of outperformance in the sector.
Market-wide positions got lowered suggesting markets going with lighter base in April series. Strategy for April series – use rallies to trim positions towards 14,800 on the upside, Put ratio spread would be good strategy given bouts of volatility seen within the bands.
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