PCR-OI on the higher side, stay vigilant: Angel Broking

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

"The benchmark index started off today's session on a positive note, despite weak Asian clues. Through index was lacklustre, stock specific momentum compel Nifty to conclude the session above 9800 mark for first time ever.

On options front, some build-up was seen in 9900 call options, followed by unwinding in deep-out-the-money call 8600 and 8700. On the flip side, 9700 and 9800 put options added decent positions; followed by unwinding in 9600 strike. At present, maximum concentration of open interest has shifted higher to 10000 from 9800 call options; while, of put option remains intact in 9600 strike.

Since the beginning of July series, Nifty rallied more than 3% but we hardly saw any buying interest by stronger hands in index futures segment. They preferred exiting from their existing longs and formed fresh short positions in this up move; resulting their index futures 'Long Short Ratio' declining from 82% to 69% during current series. However, they continue their buying streak in index call options. As far as Stock Futures are concerned, FIIs covered good amount of their shorts, which is mainly due to SEBI's restriction on unhedged derivatives positions of P-note. Due to significant open interest additions in 9600-9800 put options, PCR-OI surged to 1.40 from 1.14 in July series. Such high PCR-OI is sign of concern as it suggests market has entered the over-bought zone and may witness some correction in near term. Thus, traders are advised to exit their existing longs and prefer stock specific approach."

Source : Equity Bulls

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