Remembering July Series & advancing to August

On Thursday we ended the July series. It was one of the severest expiry that we have seen in last few months. Inspite of being a month when the government presented its budget proposals, market witnessed serious pressure. The overall deteriorating condition of the economy, global problems and a budget which was unable to address the issues businesses are facing dented the mood in the market. Adding to this was the idea of additional surcharge to non-corporates. This will move up their tax liability to almost 43%. ­ Clearly, while rest of the world have either zero or low taxes on FII investments, this was not going well with them. We all know what transpired post that.

Nifty closed at 11252, very close to the breakeven point of 11300 Put writers. This strike had the maximum Put build up, one reason why Nifty kept hovering around that level during the expiry week.

So, let’s see a few pointers about what happened in the July series:

• From the end of June series to the end of July series Nifty has lost 589 points, nearly 5% lost. Post this Nifty is left with just 2.5% gain for the year. On closing basis this is the lowest level since March on expiry basis.
• Sectorally, Financials, Auto and Infra were hurt the most, losing nearly 12% each. Power, Pharma and IT somehow managed to end in green.
• FIIs witnessed outflow of near 12000 crores, while DIIs were buyers of near 9100 crores. ETFs witnessed muted flows. The inflows from that segment was arrested.
• Deliveries marked in sectors which moved lower was much more than the sectors which moved higher. Private banks witnessed cash selling of more than Inr 7500 crores and Auto stocks nearly Inr 5000 crores. While Power stocks and FMCG witnessed Inr 600 crores and Inr 300 crores worth of deliveries. Pharma and PSU Banks witnessed low delivery based selling. Some signs of easing over there.
• Single stock futures open interest is at all-time high in terms of shares. Making it slightly difficult to push down markets further. Since April the open interest in terms of shares has moved higher by 10%.
• There heavy Put build up at 11000 and 11200 strike will act as strong support, while heavy Call build up at 11500 act as strong resistance.
• From a rollover perspective; Financials, Private Banks, Auto, Cement and Oil & Gas witnessed rollover of Short positions. While IT stocks witnessed roll over of Long positions. PSU Banks and FMCG stocks did not witness rollover of the Short positions.
• Financials, Oil and Gas and Auto stocks have open interest which is at 6 months high. Any short covering lead rally can be fueled by these segments.

These were the major highlights of the July series which went by. Let’s hope August bring some relief to the bulls.

Happy Trading.

Cheers!!!