PCR-OI at its peak since July 2012, not a worrisome factor: Angel Broking

Views of Ms. Sneha Seth (Derivative Analyst, Angel Broking):

"Tuesday's fantastic run was followed by some consolidation in the initial hours; however, some buying interest got attracted from the lows in the latter half to conclude the session above 9500 mark. Though market traded in a narrow range, plenty of action was seen on individual counters both in terms of price as well as open interest. We saw large cap counters like TATAMOTORS, TATAMTRDVR, ICICIBANK and TCS rallying with good amount of long formation. While, shedding of open interest or short covering was seen in TATASTEEL, IBULHSGFIN and TATAPOWER.

As far as today's options activity in Nifty is concerned, some fresh positions were formed in 9600 and 9650 call options; followed by unwinding in 9400 strike. On the other hand, 9500 and 9400 put options continued adding significant positions.

One of the noteworthy observations was PCR-OI of Nifty (1.41) surged at four years high during the day, this is mainly because of meaningful short formation in put option which is certainly not an alarming sign for bulls. Stronger hands (FIIs) have been repetitively writing index puts along with fresh long addition in index call options since last couple of days, suggesting they remain hopeful on our market. Since November series, the BankNifty open interest has jumped more than double and we believe majority of the positions formed during these period are on long side and are still intact. In addition, 23000 and 23100 call options of BankNifty are now attracting trader's attention. Taking into consideration the above data, we continue maintaining our optimistic stance on market and would suggest traders to remain with trend."

Source : Equity Bulls

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