Options data predicts that the Nifty upswing will continue in June, and that any corrections would be a good time to buy.

The Nifty upswing is still intact, and there is generally bullish mood, as seen by the declining volatility, growing Put-Call Ratio, expanding FII Long-Short Ratio trend, and buildup of Longs in May Expiry.

The benchmark Nifty index of the National Stock Exchange (NSE) started the June series strong and finished the month with a gain of 178.20 points to close at 18,499.35. On Friday, Nifty provided a higher closing on both the daily and weekly charts. It is currently 2.10 percent behind the 18,887.60 all-time high set on December 1, 2022.

The decrease in volatility, the rise in the Put-Call Ratio (PCR) from the lows, the trend of increasing Long Short Ratio for Foreign Institutional Investors (FII), and the accumulation of Long Positions for May Expiry with both Open Interest (OI) and Price all show that the Nifty’s uptrend is still intact and that sentiment is generally positive. Any correction will present a fantastic buying opportunity.

The fear index, popularly known as the India VIX, decreased for the second day in a row, giving the bulls significant solace on the opening day of the June month series. In the Future OI data on Friday, short-covering was seen as Nifty surpassed its 18,400 barrier to close at 18,499.35.

The trading pattern seen in the May series itself provided evidence of this impact. Nifty increased by 3% during the course of the May series from an OI of 89.62 lakh shares to 92 lakh shares.

Additionally, compared to last month’s expiry rollover of 64.11 percent and its three-month average of 69.98 percent, it experienced a much higher rollover (70.61 percent) with a higher cost of carry (+0.57 percent), indicating that long positions were carried over to the following expiry.

When the May month expired, the Nifty increased 2.27 percent, going from 17,915 on April 27 to 18,321 on May 25. During this time, the index fluctuated between levels 18,200 and 18,400, with both areas serving as strong support and resistance levels, respectively.

The pressure on the bulls was maintained during the May series as the India VIX increased by 9.58 percent, rising from 11.42 to 12.50 levels. The India VIX and Nifty typically correlate negatively. Nifty decreases when VIX increases, and vice versa. Between May 16 and 19, when volatility had increased by roughly 16 percent from the beginning of expiry, the Nifty plummeted by close to 400 points.

Volatility began to decline on May 18 and the Nifty continued its upward path, closing at 18,321 from the lows of May 19 of 18,060.

On the other hand, the FII Long-Short Ratio, a sentiment indicator, fluctuated between 41.26 and 57.55 percent over the May series. It moved in the 45-50 percent range from May 3 to May 24, which was consistent with the sideways trend of Nifty during that time.

Up to the penultimate day of the May series expiry, FIIs could be seen gradually increasing their short exposure. Due to significant short-covering on the May series expiry day, the ratio increased from the day before’s 49.12 percent to 57.55 percent, which helped Nifty rebound in the afternoon’s last hour.

Another well-liked derivative indicator that is used by traders to determine the market’s general tenor is the PCR. The PCR decreased from 1.22 to 0.97, showing increased pressure from Call authors. This was very clear from the price chart, where 18,400 proved to be a significant resistance and Nifty failed to provide a firm close above this level three times during the May series.

On May 18, the PCR also dropped below 1 for the first time since April 21, 2023. On May 19, when Nifty finished at 18,203, it reached a low of 0.853. The 20-day exponential moving average (EMA) on the daily chart was also tested and broken on this day by Nifty.

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