Put writers ran for safe haven as index plunged below five digits: Angel Broking

Views of Ms. Sneha Seth (Derivative Analyst, Angel Broking):

"As indicated by Asian bourses, our market opened gap down and was under selling pressure for the entire day. The benchmark index plunged below 10000 mark and eventually ended the session with a cut of 157 points. Nifty Futures open interest surged 2.39% and at the same time profit booking in BankNifty led 8.68% decline in OI.

In Nifty options front, we witnessed huge OI addition in 10000-10200 call options and we believe these are longs formed by retail participants. On the other side, put writers of 9900-10100 ran for shelter as Nifty corrected below the five digit figure. This, resulted maximum concentration in put option shifting back to 9900 strike; while, highest OI remains intact in 10200 call option.

In our past few articles, we have been consistently highlighting that the weaker hands were driving the market in the recent upmove, which made us uncomfortable to participate in index. Though, we believed that Nifty has limited upside, today's massive fall was also surprising for us.

In today's session, FIIs continued they selling streak in cash segment and they bought good amount of index puts along with writing in call options, which is certainly not a good sign for bulls. Though, they were buyer in index futures today after quite some time. Looking at the F&O data, we believe 9900-9950 is an immediate support for index; while 10100-10150 is a strong hurdle for index."

Source : Equity Bulls

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