Shorts in financials leads to underperformance: Angel Broking
Derivatives Outlook by Mr. Ruchit Jain (Equity Technical Analyst, Angel Broking):
"During the week, the Nifty index corrected by 6.55 percent with some fall in open interest whereas Bank Nifty corrected by over 13 percent with rise in open interest by 6.88 percent. The Put-Call Ratio has decreased from 1.23 to 1.18.
As far as Nifty options activities for the week are concerned, we witnessed some open interest addition in 8500 and 9000 call options whereas some open interest addition was seen in 8000 and 7500 put options. However, the overall activity in options segment continued to be low due to high IV's. Maximum open interest for the monthly series now stands at 9000 call option and 8000 put option.
FII's were light on positions during last week post F&O expiry but they have formed some short positions during this week. As per the options data, 8000 is the immediate support for Nifty whereas 8500 is the resistance. The monthly options data indicates 7500 to be the next support below 8000 mark. One positive data noted was the fall in India VIX. If we continue to see this declining trend, then the volatility could reduce in the near term. Analyzing the above data, the Banking and Financial space is expected to continue its under performance in the coming week unless we see some short covering move. Stocks from the Pharma space witnessed long formations and hence, we could continue to see some out-performance from this sector. Stocks such as Torrent Pharma, HindPetro, Lupin, Cadila Health, Dr.Reddy witnessed long formations in futures segment whereas short positions were formed in stocks such as JindalSteel, Cummins Ind, RBL Bank, L&TFH, Maruti, MFSL."