Large investors gear up for Nifty volatility with 'Puts' ahead of Brexit

MUMBAI: Ahead of Brexit vote on June 23, investors in India are preparing for a major volatility in equity markets. Put call ratio (PCR), a lead indicator for market direction of Nifty is at 1.31 for the current expiry.
Such a high ratio, in the last one year has resulted in Nifty index witnessing high volatility or downward pressure - mid August and mid-October. So what is Put- Call ratio? Put is an option that usually investors buy to hedge their portfolio from a downside risk.

Funds which has invested billions of dollars in India for a long term and do not wish to sell his portfolio are buying options, mainly puts, leading to a peek in PCR yet again. The chart shows how Nifty behaves after PCR peeks above 1.3.