F&O tracker: Brace for a higher spell of volatility

By Ashish Chaturmohta, Fortune Financials

The April expiry is likely to be seen on a dull note, as Nifty futures remained sideways in the range of 6690-6860 in the last couple of weeks.

Even the rollovers to the May series is seen quite lower compared to the previous month, as till now it is seen around 34% with 73.5 lakhs shares of open interest (provisional) versus 45% with 125 lakhs shares open interest, the previous month on the same day. The participation is seen lower in the next series, as traders are keeping their positions light ahead of the most awaited election results in the coming month. Even FIIs haven’t seen active during this series.

They have been net sellers in the Index futures to the tune of Rs 500crore and in stock futures, they net sold around Rs 2800crore. Technically, Nifty futures is in a consolidation phase in the range of 6770-6860 levels, sustaining above 6860 levels.

We may see fresh buying participation to emerge in the market and can lead the index towards 6950-7000 levels. Till the index future holds above 6770 levels, the trend will remain sideways to positive. BHEL, LUPIN, ICICIBANK, LT, MARUTI are few stocks which may outperform the market.

India VIX has seen a phenomenal rise during this series ahead of the election result event, as it moved from 15.88 to around 33.36 levels. Now, if we compare the India VIX during 2009 a couple of weeks prior to the announcement date, it ranged between 35-70 levels.

So, we may see the volatility to increase from current levels and lead to uncertainty. The maximum OI concentration for May series is currently seen at 7000 strike price call option (OI base around 20.50 lakhs) and at 6500 strike price for put option (OI base around 15 lakhs).