Short covering in call options is a sign of relief for bulls: Angel Broking

Views of Mr. Jay Purohit (Technical and Derivative Analyst, Angel Broking):

"Today, the Nifty opened on a positive note on back of favourable global clues. But, the index failed to hold the opening gains and corrected in the first half of the session. However, due to decent recovery in the later half, the Nifty concluded the session with marginal gains over its previous close.

On index options front, good amount of unwinding was seen in 9700, 9600 and 9800 call options. On the other hand, 9600 and 9450 put options added decent positions. Highest open interest in current series is placed at 9700 call and 9500 put options. The 'Put Call Ratio (PCR)' has also increased from 1.15 to 1.20 on back of short covering in mentioned call options, which is a sign of relief for the bulls.

Today, FIIs' activity remained subdued in index futures and options segment. However, their previous longs formed in last couple of months are still intact in the system. At the same time, our market absorbed their selling in index future in previous three sessions without any noticeable correction, which certainly bodes well for the bulls. Since, derivative data is not indicating any major correction at current juncture; traders are advised to remain with the broader trend. Going forward, the index has strong support around 9500 - 9550 level and any corrective move towards the same should be used to initiate fresh longs."

Source : Equity Bulls

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