The Nifty50 remained in the range of 9,800-9,950 during the week and the trend remains positive above 9,800 which is the highest Put base. The VWAP of the series is placed at 9,760. Hence, even on extended profit booking for this series, 9,760-9,800 holds important support zone.
The highest Call base is placed at 10,000 strikes. However, the Call positions were lower in comparison to Put option since the start of the series.
Before, the recent breakout above 9700, the Call open interest from 9,700 to 10,000 strike was only 33 lakh shares while 9,500 and 9,600 Put strikes had open interest of more than 60 lakh shares.
The 10,000 Call strike now as are moving to the settlement has seen addition and it is holding more than 70 lakh shares. We believe Nifty positive move should continue and the declines towards 9,800 should be utilised to buy in the coming week also.
In the case of profit-booking in the outperforming spaces, underperforming stocks can take the lead. Nifty futures had seen the addition of almost 11 percent in this series. We believe fresh longs were added from lower levels of Nifty. These positions are getting rolled into next series.
The foreign institutional investors (FII) inflows continued in the week under review as MSCI EM has moved over 5 percent in the trailing 10 days. Inflows, however, remained lower as the index moved up 1 percent in the last week, with inflows exceeding the USD 150 for the week only in S Korea and Brazil.
Indian equity saw strong inflow number of USD 280 million and a possible explanation for the same could be p-note guidelines fall out on upcoming July expiry. Speculative derivatives positions are possibly converting into cash.
In the F&O segment, the flows were tepid. In stock futures, FIIs added longs totaling over USD 110 million and also bought index options worth over USD 180 million.
A decline of Dollar to the 10-month low has lifted animal spirits of EMs, with MSCI on track to post strongest monthly gain since March 2016. A stronger currency with a lower yield has propped up the sentiment for the equities as well.
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