Daily FNO View

Despite closing the week near highs above 44000, the banking index relatively underperformed broader markets last week as it largely consolidated in the range of 43500-44000. Selling pressure in private sector heavyweight HDFC Bank was the major reason behind recent underperformance. Going ahead, we believe the Bank Nifty may remain a market performer and declines towards 43500 remains buying opportunity in the short-term

• In line with the Nifty, Bank Nifty open interest was also on a lower side and it started the June series with the lowest OI at inception since January series. Profit booking near lifetime highs may be the reason behind closure of positions in banking index. However, considering continued FII buying, we remain positive on the banking index till it holds above 43500 levels

• We believe the Bank Nifty is well placed to surpass 44000 on upsides. Since the index is holding above the support levels of 43500, Put writing activity is moving higher from a weekly perspective. For the coming week, major chunk of Call writing is still placed at 44000 strike. A close above this level should trigger a round of covering among Call writers

• From current levels, Axis Bank still looks positive and is likely to pick up pace as it has closed above its major Call base of 930 whereas supportive action should continue from midcap banks