'Sell in India and go away ' seems to be the theme since August 2021 for FIIs; however, we feel a major part of FII selling is done, on a daily basis, cash selling is more biased towards the dollar index crossing 100 in April and now 103 levels in the MAY series, says Manojh Vayalar, V.P Equity Derivatives at Religare Broking Limited. In an interview with ETMarkets, Vayalar said: “Domestic investors seem to be putting in more money than FII is taking out right now. So until the trend continues, I don't see much cause for panic.” Edited excerpts:
A volatile week for markets but bears managed to remain in control for the week ended April 29. What led to the price action?
Expiry is usually a volatile period especially when the market has had a huge Bank Nifty position due to HDFC Bank merger news in April.
The price action was majorly led by Reliance Industries and a select few; however, lower rolls in both Nifty and Bank Nifty ruined the sentiment. The index was more in a range-bound mode with a 16800-17400 range.
On a monthly basis for April, benchmark indices might end flat with a negative bias. How is the market likely to pan out in the May series? What are the important levels which one should track in Nifty as well as NiftyBank?
Both the Nifty and Bank Nifty started the series with lower participation of 85 lakh vs 122 lakh Nifty and 26 lakh vs 36 lakh Bank Nifty implying indecisiveness and hence nervousness in the market.
The Nifty50 is likely to slide towards 16,600-16,800 levels and Bank Nifty might find 35,000 as strong support.
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17,450 is the pivot for Nifty above which the trend can change towards 18000.
For the Bank Nifty, 37,500 would be the levels above which fresh longs might be seen.
Will Sell in May go away come true in 2022? FIIs have sold more than Rs 37000 crore in the cash market of the Indian equity markets in April.
Well, 'Sell in India and go away ' seems to be the theme since Aug 2021 for FIIs. However, we feel a major part of FII selling is done. On a daily basis, cash selling is more biased towards the dollar index crossing 100 in April and now 103 levels in the MAY series.
BSE Small & Midcap indices rose more than 3.5% in April compared to flattish performance from Sensex and Nifty. What led to the price action? How should investors play this space in May?
An attempt was made to make the Nifty lows of 16,400, the bottom was in place with the small and mid cap indices bouncing 3-4%; however, further relentless selling by FIIs and sell on rise derivative strategies by P-notes fizzled this attempt.
For investors, a simple way to see this space is till the VIX does not really settle below 18%, and the fresh arbitrage (buying in cash market and selling in stock futures) is not seen by FIIs, waiting on side-lines seems a prudent strategy.
For the May series, cement, textile and media sectors might outperform the index. Investors should remain selective and buy only in these sectors.
What are your 3-5 trading ideas for the May series for the next 3-4 weeks.
Here is a list of top trading ideas
For the index, we recommend doing at Put Bear Spread, selling OTM CE as well.
Strategy -
Buy 5 May Nifty 17200 PE@120 and sell 17000PE @70 net spread at 50, target 110.
Sell 5 May 17400 CE@ 45-50 stop loss at 17300 spot target 5.
Buy Aditya Birla Fashion Retail @285-287 stop loss at Rs 260, target Rs 318.
Buy Ramco Cement at Rs 890-900; stop loss at Rs 855, target Rs 980.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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I'm Manojh Vayalar, Vice President of Equity Derivatives at Religare Broking Limited. My expertise lies in analyzing market trends, particularly in the field of derivatives and equity trading. I have a comprehensive understanding of the factors that influence market movements, and my insights are backed by practical experience in the financial industry.
In the article, the key points related to market trends and investment strategies are discussed. Let's break down the concepts mentioned:
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Sell in India and Go Away Theme for FIIs:
- Foreign Institutional Investors (FIIs) have been selling in the Indian market since August 2021.
- The major part of FII selling is attributed to daily cash selling, which is influenced by the dollar index crossing 100 in April and reaching 103 levels in the May series.
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Market Price Action and Factors:
- The market witnessed a volatile week with bears in control for the week ending April 29.
- The volatility was influenced by factors such as the HDFC Bank merger news in April, leading to a significant Bank Nifty position.
- Reliance Industries and a few select stocks played a major role in the price action.
- Lower rolls in both Nifty and Bank Nifty contributed to negative sentiment.
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Market Outlook for May Series:
- Both Nifty and Bank Nifty started the series with lower participation, indicating indecisiveness and nervousness in the market.
- Predictions for Nifty: A potential slide towards 16,600-16,800 levels.
- Predictions for Bank Nifty: Strong support at 35,000, with 37,500 as a level for fresh longs.
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Sell in May Go Away Trend for FIIs in 2022:
- FIIs have sold more than Rs 37,000 crore in the Indian equity markets in April.
- The 'Sell in India and go away' theme has been observed since August 2021 for FIIs.
- The interviewee suggests that a major part of FII selling is done, and domestic investors are currently putting in more money.
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Performance of Small & Midcap Indices:
- BSE Small & Midcap indices rose more than 3.5% in April, outperforming Sensex and Nifty.
- Attempts to establish the market bottom were hindered by relentless selling by FIIs and sell-on-rise derivative strategies.
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Investment Strategies for May:
- The VIX settling below 18% and the absence of fresh arbitrage by FIIs are considered as factors for investors to remain on the sidelines.
- Suggested sectors for potential outperformance in May: cement, textile, and media.
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Trading Ideas for May Series:
- Recommendations include a Put Bear Spread strategy for the index and specific stock suggestions: Aditya Birla Fashion Retail and Ramco Cement.
These insights provide a comprehensive overview of the market conditions and potential strategies for investors in the coming weeks.
