Market may open higher as F&O bears crash out
₹233 a share, with 50 shares making one contract. This baked in volatility of 2.3% on the up and downside from 20,300, with the Nifty likely to trade between 20,067 and 20,533 on Monday. Derivatives heads of research at top broking firms expect that a gap-up opening would be aided by short-covering of futures contracts by FPIs and call sellers who have net sold calls at 20,200 and 20,300 levels, and possibly at the 20,500 level.
The Nifty closed on 1 December at 20,267.90 after touching a fresh high of 20,291.55 , surpassing its previous record of 20,222.45 on 15 September. The Sensex, which is yet to make a fresh high, could do so on Monday, after falling short of its 15 September record of 67,927.23 by just 0.7%, closing at 67,481.19. “The markets could gap by 100-150 points and will now price in a clear mandate for the BJP at the Centre next year, which will add more steam to the rally," said Chandan Taparia, head, derivatives and technical research, Motilal Oswal Financial Services Ltd.
“While the markets could see fresh institutional and retail buying of CPSEs (central public sector enterprises), the rally to new highs of 20,500 and 20,750 will be aided by short-covering by FPIs and call options sellers." NSE data showed that retail and high net-worth clients and proprietary traders were cumulatively net short index options, while FPIs were net long on both calls and puts. While some of these positions are hedges, others were initiated just ahead of the results of state elections. Clients were cumulatively net short by 19,484 Nifty and Bank Nifty call options contracts on 1 December.
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