In an interview to CNBC-TV18 Amit Gupta of ICICI Direct shared his reading and outlook on the futures and options market.
Below is the verbatim transcript of Gupta's interview with CNBC-TV18
Q: What kind of downside do you see between now and expiry because we have expiry along with Budget day tomorrow? On what note do you see February going down?
A: I think the major problem for this market has been the stock Futures open interest, which started climbing from the month of January and we saw how the market was finding pressure because of such a heavy leveraged positions in the market.
In the month of February people were not rolling the positions into March because they were expecting a pre-Budget rally in the month of February. However, that did not happen and these positions were stuck up. Even now we are not seeing the positions getting rolled to the next series because after the Budget session possibly people may start taking bet in the remaining one-two hours and then one will see lot of stock volatility, which is going to happen.
I feel the breach of the critical level of 100 day moving average is very crucial because the main rally started from the month of September and we had surpassed almost five months and five months means 20 trading sessions per month that comes to 100 days. So, once 100 days moving average is taken off, one has seen the panic and heavyweights falling.
Therefore, it is possible that in today’s session one may see more stock specific pain coming in and there may be more long liquidation happening and then the cues are there with the Budget only. If any positive surprise comes only then one may see a recovery towards 5,820-5,830 levels again. Otherwise one may remain in a lackluster market.
I think the Foreign Institutional Investors’ perspective also has to be considered because they created shorts in the first week of February and at that time only the Nifty premium almost vanished. Still one has not seen any kind of short covering from the FIIs. The index Futures, open interest is still climbing actually from the FIIs perspective and they bought in the beginning of February, the index Options especially the 5,700 Put Option around Rs 10-15. Therefore, that Option also has moved up to almost Rs 18-20. So, in today’s session or tomorrow morning, it is possible that one can see some closure of positions by the FIIs that can provide some cushion around 5,680-5,650 and that is going to be the immediate support.
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