Explaning high Put Call ratio

CNBC-TV18's, Head Market Research Analyst, Anuj Singhal : The distinct point about the June series is the high PCR it begins with despite the recent weakness in the market. Now a PCR of over 2 under normal circumstances would indicate huge bullishness, but current market sentiment is far from it. In fact Nifty is just about holding on to its massive support level of 4800. So what explains this high PCR?

A closer look would reveal some more information. 4800 and 5000 Put have a combined Open Interest of Rs 5000 crores, which is quite high. At the same time, IVs too have inched up. It looks like a lot of protection has been bought using Puts with Nifty finding support at 4800 but not looking convincing. Equally, some Put writing at 4800 can't be ruled out, as that level is now looking sacrosanct. Next 2 days will present a better picture as far as PCR is concerned

Among individual stocks, IFCI and Ispat are clearly back in favour. IFCI was the top traded counter and has added huge Open Interest as speculative activity again picks up following the revival of stake sale process. Ispat on the other hand has seen 92% rollover and has been on a relatively strong wicket.

On the other hand, NTPC has looked the weakest stock with 10% fall in a week's time and huge OI build-up. Also watch out for DCB, which sae big OI build-up on Thursday

DISCLAIMER: The author is not allowed to trade in equity markets including Futures and Options. His only exposure to capital markets is via shares of TV18 and Network18 granted to him as ESOPs by the company and investments in some long-term mutual funds.