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Last three series have been disappointing for market participants. Finally, the July series turned the tables in favour of the bulls as we witnessed a spectacular run of nearly eight percent in the benchmark index. We had an important event of Fed meet lined up in the final week of July series and fortunately, US Fed chairman did not shock the markets this time as they announced a rate hike of 75 bps which was very much in line with expectations. In fact, the dovish commentary lifted the overall sentiments in US markets, which had a favorable rub off effect in our markets on the last two trading session to settle at the highest point tad above 16900 mark

During the series, we observed covering of shorts and addition of few bullish bets in Nifty as well as BankNifty. Rollover in Nifty and BankNifty stood at 76% and 82% respectively. However, looking at the open interest reduction series on series and average three months rollovers, it seems most of the shorts formed in last two-three series have been lightened up. Although stronger hands were net sellers in the cash market segment last month; the quantum has reduced drastically. In fact, they not only exited bearish bets and added relevant longs in index futures but also rolled over these positions in the coming series. The ‘Long Short Ratio’ which was at 15% has surged to 57% MoM, which is the key reason for improvement in the overall sentiments. On the options front, we could clearly see trader’s eyeing 17200 followed by 17500 levels on the upside, whereas the base has now shifted higher to 16800-16900 zone. Considering the above development, we expect continuation of ongoing rally in August series. Hence, traders should utilize declines to add fresh bets in system.

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