Derivative Insights - May 18, 2020 - Geojit

The Nifty May futures closed at 9137.10 with a loss of 0.07% or 6.8 points on Friday. Open interest of the current month expiry increased by 1.62 lakh shares indicating addition of short positions in the markets. Nifty future traded at premium of 0.25 points against a premium of 1.15 points on Thursday. Nifty's VIX fell marginally by 0.43% to close the day at 38.0175 versus 38.1825 on the previous day. FIIs were sellers for in the F&O segment; sold derivatives worth Rs 279.42cr on 15 May as per provisional figures. On the open interest front, in the future index long, FIIs unwound positions for four consecutive sessions; reduced positions on Friday by 9.09% and added exposure in future index short by 15.78%s.

Nifty Outlook

With the reduction on Friday, FIIs now hold less than half of what they held in index future longs at the start of this month. The proportion of shorts in the index future segment is now nearly 64 percent, and an abnormal level, which is likely to see a rebalancing this week, unless this is pointing to a steep and sudden drop in Nifty. Rather, this could infact be due to the precariously low overall OI in the index future segment, an observation we made last week too, allowing us to see lesser possibilities of a directional downside. Meanwhile, maximum OI along puts is seen at 8500, whose vicinity saw short build up. Calls on the other hand saw short build across most strikes on Friday, while 10,000, hitherto one of the most active strikes so far saw short covering, with interest shifting to lower strikes as Nifty slipped couple of steps in the last week. In all, the week is to start with range-trading expectations, with lower expectations of a directional downside.

Source : Equity Bulls

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