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Index pause ahead of election outcome
Nifty saw its narrowest trading band (307 points high to low) in past 22 months since June 2017, April series was tough for traders as wild intraday gyration continued as markets digested the big gains made previous month. Divergent trends were visible BankNifty underperform Nifty. Series highlights include a) FII’s flows remained resilient. b) India VIX was up 40% during the month as participant prepare for event led volatility c) NSE excluded 34 stocks from F&O trading from July 2019.
Rolls for Nifty/ BankNifty stood at 81.4% (2cr shrs) /75% (17.5lakh shrs) vs 67% (1.81cr shrs) /71% (22.8lakh shrs) previous month. Market-wide rolls stood at 87% (88% previous expiry). Elevated cost of carry/strong FII’s index positioning coupled with higher VIX likely to keep Index volatile. Nifty has tendency to witness wild swings in the month of May (i.e. during election years). In May 2014, Nifty recorded high/low trading band of %14, followed by 30% in 2009 and 42% in May 2004. FII’s index futures long/short ratio starts at 3x levels for May series. Maximum call/put OI on Nifty for May month stands at 12,000 call (1.05mn shrs) and 11,000 puts (2.3mn shrs).
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