By Ruchit Jain
The September series started with long roller over of positions but most of them were by the Client section as FII’s had not carried forward many long positions. After closing above 17500 on Friday, the index started this week with a significant gap down as the global markets reacted negatively to the Fed’s statement on inflation and rate hikes. Nifty sneaked below 17200 but it recovered some of the losses which was followed by a sharp run up in Tuesday’s session to end above 17750. However, it was not done yet, post the mid week holiday Nifty again started the session on a negative note and ended the weekly expiry day tad below 17500.
The indices witnessed a sharp rise in volatility as we saw swings on both sides which perplexed market participants. The INDIA VIX rose above 20, although is still within the comfortable limits. We have seen formation of mixed positions in this volatility which has restricted a directional move on either side. However, if we look at FIIs positions, they started this series with rollover of more short positions and have added more shorts. Their ‘Long Short Ratio’ is now around 27 percent which means 73 percent of their total positions in the index futures are now on the short side.
On the other hand, the clients section has about 61 percent positions on the long side. In options segment, 18000 call option has highest open interest for coming series while 17700 and 17800 strikes have seen some open interest addition indicating immediate resistance zone. On the flipside, 17000 put has highest open interest in put options while 17300 will be immediate support as per the data.
The volatile movement in a broad range indicates indecision as to the directional move for the index. However, looking at the short formations by the stronger hands, it seems the market will not be in a hurry to rally higher and infact could see a corrective phase in the near term. Amidst this volatility, the stock specific momentum is giving much better trading opportunities. Until Nifty surpasses the major hurdle of 17800 and 18000, we are not out of the woods yet and hence, traders are advised to stay cautious and trade with a stock specific approach.
(Ruchit Jain is the Lead – Research at 5paisa.com. The views expressed are the author’s own. Please consult your financial advisor before investing.)