Nifty likely to face selling pressure, FIIs add shorts

Mumbai: With Indian markets getting into a “sell on rise” mode, analysts are advising their clients to initiate a bear put spread on month-end Nifty options in the event of a bounce in the index.

If the market bounces to or above 9,000 from Monday’s close of 8,823, they advise buying a 9000 put and simultaneously selling an 8,500 put to reduce the debit. All options expire on May 28.

The strategy is safer than buying a naked put as the client could lose the entire premium if the Nifty expired or traded above 9,000. While the strategy reduces the debit, it also caps the profit.


Derivatives experts like Rajesh Palviya of Axis Securities and Chandan Taparia of Motilal Oswal suggest a bear put spread in the event of a bounce.

The negative sentiment was underscored by foreign institutional investors (FIIs) raising their outstanding short index futures positions Monday along with selling shares worth a provisional Rs 2,513 crore. They were cumulatively net short index futures — Nifty and Bank Nifty — by 45,470 contracts on Monday.