The highlight of yesterday was 41.62 lakh crore turnover for June expiry which is a record so far and for the first time ever we have touched and crossed 40 lakh crore. July series starts and it is going to have 5 full weeks of trade and we will have 25 trading sessions. We have a lot of worries to negotiate like the lifting of lockdowns, restarting of the economy and how the second quarter of FY’21 pans out. April-June quarter was almost a washout with lockdown dominating most of the period and we need to see how July is going to perform.
Globally, things are moving on liquidity that was induced by central banks. Yesterday afternoon it was ECB which came out with its liquidity measures that pulled Europe from red to end in green. US markets also ended with green with Dow gaining 300 points. Today morning Asia is also in green with Japan up 250 points and Hong Kong which was shut yesterday playing catch up is down 150 points. Brent crude also went up and is trading at 41.5 dollars now.
What to expect from the July series?
If we look at the last 3 July series we have seen 5% plus gains in 2017 and 2018 while last year Nifty corrected 5.4% in July. So, July is 2-1 a green month. Having said that we are now into the second half of the year and out of 6 months, 4 months went for bears while 2 months April and June went for bulls. June was a bright month with 799 point gain for Nifty and Nifty went up all the way from 9500 mark and closed at 10280 levels.
Fundamentally, July will be the month where we have the Q1 results but am not sure how many of the companies will be really ready and how the results would be if at all they are declared. Added to that we will look at IIP for May and CPI inflation for June and technically we have the 9500 levels which could be the firm support as it is the 50% retracement level as well as 50dma. Then we have the 20 and 100dma at 10000 level and the June high if 10500 and finally 200dma of 10900 as the levels to look out for in this series.
How are F&O cues stacked up for the July series?
On the Futures and Options front, if we look at the rollovers, they were higher than the last 3 months at 77% and we had more short positions rolled over to July than long positions. As a result, Nifty futures long positions start at 42% compared to 63% in June. However, the contract load for July is 1.01 crore shares which are also highest in the last 3 months. This simply means FIIs who are the biggest players are bearish in July and it is confirmed by the premium for Futures which is starting at a 40 point discount.
On the options front, the series starts at a PCR of 1.20 vs the June series which closed at 1.50. For the July monthly expiry, 10500 call has highest OI for now indicating the roof of the market and on put side 9000 put has the highest OI indicating a 9000-10500 range for expiry for July month. However, for 2nd July weekly expiry 10500 call added a maximum OI of 6.5 lakh contracts and it has the highest OI on the call side. On the put side, 10000 put added 6.1 lakh contract and it has the highest OI indicating 10000-10500 as the range for expiry.
What is the Nifty call for the day?
July series starts and it is starting on a discount of 40 points which indicates that July starts off with a bearish outlook. How things move from here depends on many factors discussed above. For today, we can go ahead and take a long position as most of the time the first day of the series is likely to be in green.
But there are conditions attached. The primary condition is, after opening around 10250-10280 range, if Nifty is able to protect this range and if it doesn’t go above 10330 mark then you should take a long position. I will explain. The chances of Nifty crossing the 10380-10400 mark are very less today. So, if you take a long position above 10330-10350 then you might get trapped. So, take a long position below that and after confirming a dip, with a 40-60 point target. This is a tricky trade and should be executed well.