“The benchmark index started off today’s session on a flat note; however attracted fresh selling pressure right from the word go. During the remaining part of the day, Nifty extended its weakness to conclude the session near the lowest point of the day.
On derivatives front, Nifty open interest increased by 3.10%, indicating fresh shorts were formed in today’s session. At the same time, we witnessed good amount of long unwinding in BankNifty as open interest plunged by 8.97% today. Banking and Financial sector were the major culprit in today’s fall, as good amount of profit booking took place in majority of the heavy weigh banking counters.
In Nifty options segment, apart from some build-up in 10100 and 10300 call options, we could hardly see any relevant activity. At present, maximum concentration of open interest is placed at 10500 call and 10000 put option.
From the beginning of August series, FIIs have been shorting index futures along with long formation in index put options. As a result, their index futures ‘Long Short Ratio’ dropped to 67% from 84%. However, rollovers figure of August series suggests they rolled majority of their long positions in index futures. Thus, the above data is not giving any clear indication. Hence, until we don’t see meaningful unwinding to their longs in index futures by stronger hands, traders are advised to avoid direction trade in index and prefer stock specific approach.”