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F&O Outlook: FIIs unwind longs, go brief, traders advised to stay cautious, support at 16200-16000

By Ruchit Jain

Post the latest pullback transfer, our markets witnessed a correction of over 500 factors in Nifty from its latest swing excessive of 16790. Nifty breached the 16300 mark on the weekly expiry day, however once more it managed to pull again increased and finish a tad beneath 16500. We witnessed some recent brief additions within the index on this latest correction. The Bank Nifty index too has seen the same correction in the previous few days and has ended simply above the 35000 mark.

Stock markets have been witnessing a whole lot of uncertainty as there have been stock-specific actions the place some sectors comparable to Oil & Gas are witnessing constructive motion due to an increase in Crude Oil costs whereas some sectors have witnessed brief formations and have seen underperformance. The index too witnessed some brief formations however majorly the FIIs have unwound longs and have shaped some extra brief positions. Their ‘Long Short’ Ratio has now fallen to beneath 25 per cent, which signifies that greater than 75 per cent of their positions within the index futures are on the brief facet. Recently, our markets have seen a corrective part when the stronger palms have shaped brief positions and therefore, this information doesn’t bode nicely for the bulls. In the choices phase, the approaching weekly sequence has an open curiosity focus at 16500 and 16600 strikes whereas the 16200 put possibility has respectable open curiosity excellent. This information signifies that 16500-16600 shall be seen as a direct resistance zone on pullback strikes whereas 16200 shall be seen as fast support. Now with 75 per cent of positions of FIIs on the brief facet in index futures, rather a lot will rely upon whether or not they cover their brief positions which can solely be a set off to drive the markets increased. Until we see any such short-covering by them, the development will stay unfavorable and therefore, traders ought to look to loosen up longs on pullback strikes.  

For the approaching weekly expiry, the helps for Nifty are positioned round 16200 adopted by 16000 whereas resistance is seen round 16500-16600 vary adopted by 17000. Traders are advised to stay cautious on pullbacks and commerce with a stock-specific method within the close to time period.

(Ruchit Jain is a Lead Research at 5paisa.com. Views expressed are the writer’s personal. Please seek the advice of your monetary advisor earlier than investing.)

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