Futures & Options outlook: Stay cautious, Nifty could face promoting stress close to 16200-16400 resistance

By Ruchit Jain

Post final week’s expiry, we witnessed a niche down opening for our markets and promoting stress was seen all through the week. Both Nifty and Bank Nifty proceed so as to add brief positions within the derivatives section which added gasoline to the continuing correction. In the center of the sequence, the choice writers had positioned themselves in 16000 strike within the weekly as effectively the month-to-month expiry contracts. As this degree obtained breached on the weekly expiry day (Yesterday), they needed to run to cowl their positions which resulted into added promoting stress.

Now, the brief positions fashioned are nonetheless intact and there’s no respite seen to date. So the development continues to stay destructive for the markets. FII’s have been promoting relentlessly within the money section as the worldwide markets too have seen sharp sell-off. In the index futures section, they began the May sequence with brief positions and in reality have added extra shorts on this expiry. Their ‘Long Short Ratio’ within the index futures section stands round 17% which is the bottom in latest occasions. This clearly reveals their bearish bias for the brief time period. 

On the opposite hand, the retail trades have ‘Long Short Ratio’ of 62% and it appears they’ve been reluctant to exit their positions would have resulted in incremental losses. India VIX has additionally risen steadily to over 24 degree. The solely knowledge which offers some hopes for a pullback is the PCR-OI which is oversold. Hence, we may see a lot awaited pullback transfer in subsequent few classes, however any such upmove ought to solely be seen as a reduction rally inside a downtrend.

In the choices section, 16000 put choice had first rate open curiosity excellent however as this degree was breached, the put writers needed to cowl their positions. The choices knowledge signifies resistances round 16200 and 16400 ranges. Any pullback transfer in the direction of the resistance is more likely to see promoting stress once more and therefore, merchants ought to proceed to remain cautious till there’s change in knowledge. The help for the approaching week will likely be initially seen round 15500-15400 adopted by 15000 degree.

(Ruchit Jain is the Lead – Research at Views expressed are the writer’s personal. Please seek the advice of your monetary advisor earlier than investing.)

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