Short Covering in Pharma conglomerates drive Nifty above 9650 mark: Angel Broking

Ms. Sneha Seth (Derivative Analyst, Angel Broking): “Finally after last four days consolidation, the benchmark index (Nifty) started off today’s session on a positive note and registered a fresh record high in the early trade. Eventually, Nifty traded in a range but concluded the session firmly above 9650 mark. Open interest activity in Nifty as well as BankNifty remained subdued. Pharma conglomerates like CIPLA, AUROPHARMA, LUPIN, DRREDDY and SUNPHARMA supported Nifty by rallying 1%-3% due to short covering.

In Nifty options front, out the money strikes 9700-10000 call options were quite active and they also added fresh positions. On the flip side, we witnessed huge open interest addition in 9600 put options. Maximum open interest concentration in June series still remains intact in 9700 call and 9400 put options.

During the week, stronger hands (FIIs) added 43,770 contracts of long positions in Index Futures along with longs in Index Put Options. We believe these put buying is many to hedge their longs in Index Futures which is not a worrisome factor. In addition, longs formed by them in last series are also intact. At present, the’ Long Short Ratio’ of their Index Futures positions is at 85.25%, suggesting they are still optimistic on market. Thus, unless we don’t see any major profit booking or fresh shorting, we maintain of positive stance on market. Considering this week’s activity, we would suggest traders to trade with positive bias and prefer stock specific approach to yield higher returns.”