June Settlement happened in style, where last week of settlement, seen a spectacular 'short squeeze' and Nifty settling exactly around 200 days EMA. FIIs have pumped in more than a billion rupees in the last fortnight. Once the settlement is behind, markets are languishing in a range of hundred points (5600 to 5700), where DIIs are net sellers on rallies though FIIs are marginally net buyers. Retail participation is completely absent, as lot of bearish sentiment is in mind, due to the huge volatility seen during June.
Results season unfolds from next week, and RBI policy in the last week, on set of monsoon as well as estimates and actual data on precipitation, will be watched closely. Inflation being very high, and Interest rates not peaked out as of now, and Government is moving towards decontrolling the other petroleum products, gradually, are all negative for risky equity investment. I am foreseeing that Nifty might not be able to move above 5750 during July, as 200 day SMA would fall around the same level, and the recent relief rally in june, made upward gaps, closest between 5600 to 5606, is held till now. Nifty should ideally consolidate in a narrow range of 5450 to 5750 during the month, and take out the 200 DMA (SMA) may be next month or so.,
One can play a short strangle of selling 5400 put and 5800 call for july series, duly protecting with stop loss, with a hedge of going short on nifty future below 5450 or long above 5750, if it gives a breakout of the range.
Happy Trading!
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