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Nifty index futures closed 0.53% higher at 11122.95 on Friday. Open interest declined by 5.7 lakh contracts indicating short covering while premium closed lower at 13.3 from 31.5. Breaking the streak of alternative days of Call writing and Put writing, Nifty options witnessed decline of open interest from both Calls and Puts yesterday. Both Calls and Puts shed open interest by 18.2% and 18.8% respectively which ensured that PCR OI moved hardly and closed at 1.24 from 1.25. India VIX closed marginally lower at 15.84 from 16.09.
FIIs remains cautious
FIIs persisted with addition of shorts in index futures on Friday. Net exposure in shorts rose by 5110 contracts and total long exposure in index futures closed at a meagre 25%. However, activity in index options was focussed in the addition of Call longs and Put shorts. Net synthetic long exposure rose by 21281 contracts and synthetic longs now holds 50% of the open interest in index options. Ironically, stock futures have started to witness addition of shorts, where they reduced 18879 contracts. However, for the moment they have not started to dump long positions which still holds 61% of the total exposure.
Strong support seen at 10800 and 10600 on a short term scenario
Covering of Call shorts from strikes between 11000 and 11300 was aided by the positive moves in the index. On the other hand, quantum of activity is still concentrated at 10800 and 10600 Put strikes which suggests that these are the major support levels of the index. Activity still focussed in the deep OTM strikes may be suggestive of the potential emergence of volatility at any time.
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