Nifty may test 5300 in 1-2 trading sessions

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Support for Nifty shifts to 5100: An analysis ALSO READ See what other CNBC-TV18 anchors have to say Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

On the F&O picture

There is a positive leaf in that because the one of first observation is that foreign institutional investors (FIIs) are buying quite a bit, they bought about 800 crore on the cash market, they bought nearly 900 crore in the Nifty futures as well but you look at the big action yesterday, it happened on the 5,200 and 5,300 put as we were discussing, between the two put strike prices, we have seen a build up of 33 lakh shares yesterday that is not insignificant.

One view could have been that people are bearish and therefore they are buying these puts and they expect the market to go down. But if you look at it in conjunction with the kind of cash buying which is happening and even futures buying which has happened over the last few days from the FIIs, I think the easier view to take is that FIIs think there is upside but they are not completely convinced and therefore they want to buy a bit of insurance.

So they are buying stocks but to protect themselves in case the market turns and fails at 5,300, they have bought a lot of insurance at 5,300 and 5,200 puts that I think is what is going on where people want to trade long, they believe that the market is headed higher, they are not completely convinced and therefore you are seeing this very high put-call ratio that you referred to because people are buying puts for downside protection. I don't think it is a bearish stance because the last couple of days the Nifty has moved 100 points.

To have that kind of conviction in a bearish contrarion move, I think would have been too contrarion a call. So I think the market is now well hedged and typically well-hedged markets don't fall off a cliff, so you might just take a small positive straw out of it.