Derivative Insights - June 3, 2020 - Geojit

The Nifty June futures closed at 9962.95 with a gain of 1.76% or 171.95 points on Tuesday. Open interest of the current month expiry added by 7.32 lakh shares indicating addition of long positions in the markets. Nifty future traded at discount of 16.15 points against a discount of 35.15 points on Monday. Nifty's VIX slipped by 2.04% to close the day at 30.1150 versus 30.7425 on the previous day. FIIs turned to buyers after a day of selling in the F&O segment; bought derivatives worth Rs 348.08cr as per provisional figures on 02 June 2020. On the open interest front, FIIs continued to add positions in both future index longs and shorts by 9.56% and 1.79% respectively.

Nifty Outlook

A near 10% build in index future longs by FIIs matches similar build in index future shorts on Monday, but with this index future proportion is more than 60 percent, which is rarely sustainable. Their call long positions have also continued to rise. Nifty option spectrum shows that 10000 was the most active call strike with long additions mostly in the neighbourhood of spot, and not much excitement is seen in far OTMs, with 11000 seeing short build up, as did 9900. Meanwhile, put traders were seen continuing to add shorts, most of them centering 9800 and a strike above and below it. All of this suggests that traders are not looking too far ahead, and the burden of expectation is concentrated. Therefore, should a weakness emerge, the turn lower could be swift, but not necessarily deep.

Source : Equity Bulls

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