FIIs continue adding bearish F&O bets despite strong upmove: Angel Broking

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

"Post Monday's strong upmove, the benchmark index started off today's session on a slightly positive note. We witnessed some consolidation in the early morning trade; but, soon latter strong buying emerged that lead Nifty rallying towards 9900 mark. As far as open interest activity in index futures are concerned, Nifty and BankNifty added 3.78% and 2.43% open interest respectively.

In Nifty Options front, we hardly saw any relevant build-up in call options; however, some unwinding was seen in 9700, 9900, 10050 and 10500 strikes of call option. On the flip side, good amount of positions got formed in 9600-9900 put option, along with huge unwinding in out the money strike 9400. Maximum concentration of open interest for August series is placed at 10000 call and 9500 put option.

In today's session, FIIs were net sellers in index futures to the tune of Rs. 1639 crores with rise in open interest, suggesting continuation of short formation. Throughout the August series, stronger hands have been consistently adding shorts, resulting plunge in their index Futures 'Long Short Ratio' from 82% to 54% (Lowest in calendar year 2017). At the same time, they bought huge quantity of index put options along with writing in call options. Implied Volatility has also surged above the resistance level of 12.70-12.80 seen in last five series. Taking into consideration the above data, we believe Nifty has limited upside and hence, would advise short term traders to buy 9800 puts of current series."

Source : Equity Bulls

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