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December Series Outlook

Nifty futures has rolled around 81% vs 82% with respect to the last month, the open interest for the new contract is higher, due to better participation into December series. Nifty futures are negatively biased till we are trading below VWAP (Volume weighted average price) of 17600 for the December series. We expect nifty to be in 18000-16400 range for the major part of December series.

FIIs have sold around Rs 36000 Cr in the cash market in November.

We believe the Nifty might be only positively biased here on if close above 17600. FIIs have started the Reverse arbitrage mode, i.e selling in cash market and buying stock futures to bring down the equity exposure, majorly a factor depending up on Bond market and Dollar index. Dollar index above 96 seems to be the pivot for this. We expect Nifty to bounce to around 17400 levels with in the first 10 days of December month.

Banknifty futures rolled at around 82% vs 80% compared to the last month. The open interest of Banknifty futures in this series is higher by around 2.5 lkh due to fresh long in positions during expiry week. Banknifty has to outperform the Nifty this series for the bullishness to continue.

Banknifty futures have been underperforming Nifty in the last three month, we believe it might outperform overall with respect to Nifty in the December series. For this series, ratio wise 2.22 is resistance and 2.08 the support. The ratio between Banknifty and Nifty currently at around 2.11

However the major support for Banknifty would be around 35300 levels. We expect Banknifty to be in 35300-40000 levels in the major part of December series.

Strategy

* Buy Banknifty 30th DEC 39000 CE@100-110, sloss at 10, trgt 320.

* Buy Nifty 30th DEC 17500 CE@150 and Sell 2* @18000 CE@50, each spread at 50, trgt 200.

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