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Published on 23/09/2019 9:48:32 AM | Source: Geojit Financial Services Ltd

Open interest of the Sep month expiry declined by 2.49 lakh shares indicating short covering in the markets - Geojit Financial

F&O OUTLOOK

Review

Nifty index futures closed 5.45% higher at 11295.50 on Friday. Open interest of the Sep month expiry declined by 2.49 lakh shares indicating short covering in the markets. Put writing in the ATM and OTM made the PCR to rise to 1.4 from previous figure of 0.83. Marginal decline was seen in the volatility index, fell 0.96% to 15.55 from Thursday’s 15.4.

 

FIIs slow in cash, but add heavily in derivatives

Though FIIs added just 35.78 crores in cash despite the steep upswing on Friday, they more than made up for that in derivatives, with massive build up in the long bets. Long positions in index futures were almost doubled with a 50925 increase in its OI, while index put shorts and call longs were increased by 40944 and 40643 contracts respectively, both unusual jumps for non-expiry move.

 

Nifty Outlook: Expiry dynamics to be in play

The directional move that we had predicted last week was in play on Friday. However, the build in the option spectrum does not look organic as it was obviously a spontaneous urgent reaction to Friday’s announcements. OTM calls have found buying interest, but not as much as puts. This is certainly due to the monthly expiry being so close. This suggests that for the week, there might be efforts signs of slowing down in the upside momentum. The 11500-11600 area, is the initial challenge, but bearish bets need to be kept away for now. Meanwhile, there are still lot of ITM call shorts to be covered, which shall give protection from any dramatic downsides.

 

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