The Hindu Business Line : Nifty future comes under more pressure

Despite a promising opening, the Nifty September future finished precariously low at 4245.8, registering a fall of 2.4 per cent over the previous week’s close.

However, Nifty September future’s premium over the spot widened further, and closed at over 17 points as against the seven-point premium seen last week.

Follow-up

We had presented two strategies:

1) One going short on Nifty future keeping the stop-loss at 4650 and 2) Buying 4300 put. Both the strategies on Nifty have worked very well, much in line with our recommendations.

2) Reliance Capital: We had expected the stock touch 1129-1130 levels. Though the stock is heading towards our targeted level, traders would not have benefited as we had advised them to avoid the strategy if the stock moves above 1344, which it did.

Outlook

As has been predicted in this column, the Nifty future could not hold on to its initial gains. The sharp fall on Friday reiterates our stance that the market is under the firm bear grip.

The Nifty future now faces a strong resistance at 4450 and has support at 3800-50. We feel that possibility of Nifty future breaking its resistance is remote, at least in the near future.

For that matter, we feel the likelihood of it heading towards its support level is brighter. While in the coming week, nifty future may try to recover some of its lost ground, it may be difficult to sustain.

Recommendation

We are presenting two strategies for investors.

1) One buying 4200 September put, which is currently quoting at Rs 100.

2) Another strategy could be going short on Nifty future keeping the stop-loss at 4450. This strategy is only for traders with a high-risk appetite.

Stock futures

SBI 1513.45

The stock is at a critical stage. Despite the sharp fall in the broader market last week, the stock has managed to hold on to its gains. It now faces resistance at 1605-1610 and has support at 1450.

A dip below the support level can take the stock to 1350-1375 levels. We expect the stock to touch its support level. Traders with a high-risk appetite can consider going short on the counter keeping a stop-loss at 1550.

FIIs trend

The cumulative FII positions as a percentage of total gross market position on the derivative segment as on September 4 was 35.36 per cent. This once again points at the high level participation of local traders, particularly the proprietary segment.

Foreign institutional investors resorted to heavy selling on Thursday and Friday. They now hold index futures worth Rs 13,378.69 crore (Rs 12,636.83 crore) and stock futures worth Rs 20,478.61 crore (Rs 19,077.47 crore).Their holding on index options stood higher at Rs 22,544.75 crore (Rs 22,093.13 crore).

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