Bulls take guard! FIIs shorted more than 28,000 contracts in index futures in Sept

At the current juncture, Option data is indicating continuation in the consolidation phase of 9,700 – 10,040 in upcoming sessions too.

September 07, 2017 / 12:28 PM IST

Jay Purohit

Centrum Broking

On Wednesday, the Nifty opened above its previous day’s low of 9,901 on the back of negative cues from global bourses. Post the gap down the opening of more than 50 points, the index continued to move lower in the initial trades.

However, due to decent recovery in the later half, the Nifty trimmed some of its intraday losses and eventually ended the session with a loss of 0.36 percent over its previous close.

We witnessed tremendous outperformance from the Midcap space as some stocks which added a good amount of long positions are Equitas, Muthoot Finance, Indo Count Industries, Mahanagar Gas and JustDial.

While counters like ITC, IDEA, PNB, Godrej Consumer Products, Cadila Healthcare and Union Bank added decent short positions.


As far as index options activity is concerned, fresh build-up was witnessed in 9,800, 9,900, 10,000 and 10,500 call options.

While 9900 and 9600 put options added huge positions; followed by unwinding in 10,000 strikes. The highest open interest in current series is placed at 10000 Call and 9700 Put options.

Foreign institutional investors (FIIs) continued their selling streak in the cash market segment for yet another day. They curbed liquidity to the tune of Rs. 3,435 crores in just four trading sessions of September (including today’s selling of Rs. 1,353 crores).

They also sold equities worth around Rs16,000 crores in August 2017, which is their biggest monthly selling figure since November 2016.

Despite an intraday pull-back, FIIs initiated short positions in index future to the tune of Rs. 763 crores. In last four sessions, FIIs cumulatively shorted more than 28,000 contracts in index futures.

As a result, their ‘Long Short Ratio’ decreased from 71.40% to 63.70%. At the same time, they bought a decent amount of index put options in current series.

At the current juncture, Option data is indicating continuation in the consolidation phase of 9,700 – 10,040 in upcoming sessions too.

However, continuous negative bets from FIIs certainly doesn’t bode well for Bulls. Thus, traders are advised to remain light on positions as we may see another round of profit booking from the upper end of the mentioned phase.

Disclaimer: The author is Technical & Derivatives Analyst at Centrum Broking Limited. The views and investment tips expressed by the investment expert on Moneycontrol are his own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
first published: Sep 7, 2017 12:28 pm

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