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Key US indices retreated, failing to sustain above their May peak. Dollar index rallied to revisit levels of 109. Brent crude oil prices rebounded off the support zone, while US Gold prices found support near 1730 level.

August series Highlights a) Nifty concluded near 17500, up for the consecutive series: In last two series Nifty rallied -11%, while from June month’s low it jumped 18% to make a high near 18k b) Sectoral trend was largely positive. C) Metal and Energy indices were top movers, both rallied over 8-10% eoe d) IT and Pharma index lacked directional moves on either side, both ended flat e) Auto and FMCG index continued their northbound journey in uncharted territory:however, recently Auto index witnessed profit-taking off the record high.

Rollovers for Nifty/Bank-Nifty stood at 82% (1.1cr shrs)/83% (22lakh shrs) vs 76% (1cr shrs)/82% (~20lakh shrs) of the prior month. Market wide rolls were 92% vs 92% for the prior month.

FIIs’ index future long/short ratio declined to 0.55 vs 1.35 (previous expiry), during start of the month, ratio escalated till 2, post which FIIs added index future short positions and trimmed long positions.  

Covered put strategy on Nifty (Expiry: 1st September)   

Sell Nifty September future near 17600,and Sell 17400 put near 115 

Stop loss 17760

Target 17400

Rationale: 

* After recent sell-off, Nifty has found resistance near 17700 zone.

* Inability to hold on to current levels could drag the index till 17400-17300 zone.  

Sector wise positioning: 

* Nifty s rollover is higher than that of past three series average. Inability to surpass April month’s high hints at immediate hurdle near 18000. Nifty is likely to digest its 18% upmove which occurred off the June month’s low : on the flip side, price correction till 17300-17100 zone is possible

* Mixed action could ensue within the banking space. Within PSU Banking space, overall structure remains positive for SBI and Bank of Baroda, one should accumulate on declines. 

* Positive follow-up action and Stability is imperative for the IT index to gain positive traction. 

* Auto index is likely to digest its multi-month uptrend; stock-specific correction in near term is likely.

* India VIX index rebounded off the lower band:it is due for mean reversion; hence it is likely inch higher till 22:this may trigger relatively higher price volatility. 

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