Futures & Options Strategy

The NIFTY futures saw a decline in OI to the 14.71% with prices coming down from high indicating liquidation of long positions, which built up during the day and built up of fresh short positions indicating market participants may see some weakness in the market led by profit booking after a sharp rally in the market. The premium in nifty futures disappeared during the closing of the session indicating lack of confidence among market participants to carry the positions. Market if it goes below 4220 levels then we may see further short positions built up in the market and longs liquidating their positions. The FII were buyers of index futures to the tune of 346 crs and buyers of index options to the tune of 220 crs. The PCR has come down from 1.43 to 1.41 indicates some consolidation may be seen in the market. The IV is around 26.50 levels indicating some volatile trading sessions ahead.

Among the Big guns, ONGC saw 13.341% drop in OI with prices remaining in a dull range suggesting some liquidation might be seen in the counter before taking any sharp direction on either side. Whereas RELIANCE saw drop of 14.25% in OI with prices coming down from high and closing near day's low indicating liquidation of long positions in the counter thus suggesting some caution to be taken while making positions in the counter.

In the TECH counters, TCS, INFOSYSTCH, SATYAMCOMP & WIPRO saw liquidation of positions with prices coming down and closing near low suggesting lack of confidence among market participants in the overall IT pack led by lack of clarity regarding currency rate. One should not take aggressive positions in IT pack unless some clarity comes therein.

In the BANKING counters, SBIN saw significant drop in OI with prices coming down from high indicating liquidation of long positions and built up of fresh short positions suggesting weakness in the counter. ICICIBANK saw drop in OI to the tune of 10.00 % with prices coming down from high indicating liquidation of long positions in the counter. HDFCBANK saw 13.34% drop in OI with prices moving up and closing high indicating fresh long positions built up in the counter suggesting further strength in the counter.

In the Metal pack, TATASTEEL saw significant drop in OI with prices coming down indicating long positions liquidating in the counter-suggesting one should book profits in the counter. SAIL saw drop in OI with prices down indicating profit booking seen in the counter. HINDALCO saw drop in OI with prices coming down indicating long positions liquidated in the counter whereas NALCO saw drop in OI with prices flat indicating built up of aggressive positions in the counter.

We feel that the volume and built up in OI suggests that market may show some profit booking in the coming few days so one should not take aggressive positions in the market. Market may show further strength and we may see fresh buying emerging in the market if market goes above 4280 levels One should trade with strict stop losses to be adhered too.