Foreign institutional investors were on a selling spree in Index Futures as well as Index Options. During the week they were seller of Rs 2,239 crore in Index futures with net short position addition of 15,600 contracts.
Week gone by saw immense volatility as Nifty fell from 11,589 last Friday to intra week low of 11,250 in first half however towards the end of the week Nifty recovered smartly and closed at 11,515 with loss of mere 0.6 percent week over week.
Most of the sectoral indices like Pharma, Metal and Bank saw deep cuts at the start of week, however short covering led indices to recover majority of losses and close flat. Bank Nifty saw major correction as Index fell below its crucial support of 27,000 and made a low of 26,555 and ended down 1 percent at 27,163. IT stocks like Hexaware Technologies and Wipro remained safe bets during the past week.
Foreign institutional investors (FII) were on a selling spree in Index Futures as well as Index Options. During the week they were seller of Rs 2,239 crore in Index futures with net short position addition of 15,600 contracts. Similarly on Index options front Synthetic long (Call long+Put Short)/Synthetic Short (Put long+Call Short) ratio fell further from 0.86 to 0.81. Friday’s session saw short covering bout by FII’s.
Put-Call ratio -Open interest wise corrected sharply in September to 1.28 level. However, as market recovered from sentimentally oversold level, PCR too closed at 1.38 for the week.
India VIX, Volatility Index, another sentiment indicator to gauge Fear and Greed surpassed 14 percent and made an intra week high of 15.45 percent however, as Nifty recovered VIX fell drastically and closed well within the band of 11-14 percent. As it trades near the upper end of the band, some cool off is expected in coming week thereby providing support to the market.
Option data suggest 11,400 is acting as a crucial support for the market. Despite Nifty falling below 11,400, Put writers were firm and did not cover much of the short positions indicating strong possibility of Nifty recovery. Higher end Call writers initially added short position in 11,400-11,500 strike but later on saw unwinding propelling the momentum on higher side.
Overall Nifty moves back in the range of 11,400-11,800. Respite if nor, reversal from lower level looks like high probability along with further dip in volatility. With relatively less trading days left for the expiry, writer would have an upper edge due to higher faster decay in time premium. To take advantage of this, Ratio Call Spread is recommended in Nifty
Ratio Call Spread is a Neutral to Bullish strategy that aims to make money from slower bullish momentum, time decay and falling volatility. Under this strategy we are buying 1 lot of lower strike Call and selling 2 higher strike OTM strike. Maximum profit would be realised if Nifty closes at higher strike..
MORE WILL UPDATE SOON!!
No comments :
Post a Comment