Derivatives Insights - May 5, 2020 - Geojit

The Nifty May futures closed at 9285.9 with a loss of 5.54% or 544.95 points on Monday. Open interest of the current month expiry added by 14.17 lakh shares indicating addition of short positions in the markets. Nifty future traded at discount; stood at (-)7.6 points against a discount of (-)29.05 points on Friday. Nifty's VIX spiked more than 28% to close at 43.6700 versus 33.9875 on the previous day. FIIs turned sellers after being buyers for seven consecutive days in the F&O segment; sold derivatives worth Rs 2335.58cr on 04 May as per provisional figures. On the open interest front, on the first day of monthly expiry, they added exposure in Future index shorts by 24.25% while reduced index long positions by 14.72%.

Nifty Outlook

The anomaly in FII index future positions discussed yesterday's has eased, with yesterday's drop prompting a 14.72% liquidation in index future longs, and a 24.25 build up in index future shorts. This has brought the long proportion down to 55.4%, which is still a lofty number. Meanwhile, short build up was seen across calls, especially in the near the money strikes, while the far OTMs like 11300-10300 and 10800 have found long liquidation, that amply reflects a sharp cut in bullish expectations. This should also be read along with the 7000 strike attracting the largest intent along put longs. Given the fact, the next highest bet along put longs is at 9300, the ATM, the spike at 7000 could be considered as a one off.

Source : Equity Bulls

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