F&O Manual: Nifty slides, traders expect more weakness as day progresses

The market was back to its losing ways of March 20 morning after taking a breather in the past two sessions as weak global cues weighed on sentiment. Most traders expect more weakness as the day unfolds.

At 10.44 am, the benchmark Nifty was down 194.15 points, or 1.14 percent, at 16,905.90. Nifty futures, too, slipped 228.90 points, or 1.3 percent, to 16,949.25.

On the options front, the maximum accumulation of put writers was seen at 16,900, which suggests that this level will be crucial for the bulls to limit the losses during the day.

Among call options, heavy writing was seen at 17,000 followed by 17,100, which indicates that a move towards recovery will be met with strong hurdles.

Rajesh Srivastava, a Bengaluru-based trader, sees a super bearish sentiment underlying in the market. He suggested investors not add fresh short positions until the Nifty witnesses a pullback towards 17,300. "Adding fresh long positions at the current juncture should be out of the picture," Srivastava said.

Sectoral indices mirrored the Nifty, as sentiment remained weak. In the F&O segment as well, all sectors witnessed the addition of fresh short positions, a testament to the widespread bearish sentiment.

Most of the stocks in the F&O segment were seeing a fresh short buildup. Among these, the ones with the maximum accumulation of fresh short positions included RBL Bank, Mahindra & Mahindra Financial Services, Trent, Bajaj Finserv, Tata Motors, National Aluminium Co and SAIL.

Short addition is a bearish phenomenon that happens when prices fall along with an increase in open interest and volumes.

Long unwinding, another bearish sign, was seen across counters like Balrampur Chini Mills, Adani Enterprises, DLF, Indiabulls Housing Finance and SBI Life Insurance Co.

Among the few stocks that saw a buildup of long positions were Muthoot Finance and Hindustan Petroleum Corporation as open interest in the counters rose around 2 percent each.  Long additions is a bullish sign which happens when price increases along with a rise in open interest and volumes.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.