Index hovering around resistance, time to buy puts
“The benchmark index opened on a mildly positive note and resumed its up move to reclaim 9900 mark. Although, we had monitory policy announcement lined up today, our market remained quite stable as the Reserve Bank of India (RBI) kept repo rate unchanged.
During the day, Nifty futures open interest jumped 7%, suggesting some long formation. In Nifty Options front, we witnessed some fresh build-up in 10050 and 10100 call options, followed by minor unwinding in 10000 call option. On the flip side, 9600- 9900 puts were very active, amongst which 9800 and 9900 strikes added huge positions. Thus, shifting maximum concentration of open interest higher to 9800 from 9700 put option. At the same time, highest open interest in call option remains intact in 10000 strike.
In past 2-3 days, FIIs formed long position in index futures but the quantum remained insignificant. While, shorts formed in last series are still in system. At present, Nifty is hovering around its strong resistance zones of 9900-9950. Taking into consideration the overall F&O activity, we would suggest traders to exit from their existing longs if any and buy 9900 put option.”