The covering of the calls at 11200 and fresh put writing across strikes through 11300 is a bullish sign, said Rohit Srivastava, founder, IndiaCharts.
Mumbai: Monday could witness a further bout of short covering by FIIs who were hugely bearish index futures like the Nifty and the Bank Nifty until Friday when they were forced to cut their short bets by buying these back for a whopping Rs 5,079 crore after the government announced that it was slashing corporate tax rates. Further short covering could take the index toward 11,500 levels in the current expiry itself, said derivatives analysts.
The buying back of the shorts caused FIIs cumulative net shorts on index futures —Nifty and Bank Nifty — to plunge by 58,771 contracts to 64,680 on Friday from 1,23,451 contracts a day earlier.
NSE data on daily FII activity in derivatives showed they net purchased 58,771 contracts for Rs 5,079 crore on Friday. This short covering played an important part in Nifty’s 570-point rally to 11274 and Bank Nifty’s 8 per cent jump to 28,982.
Derivatives experts like Amit Gupta of ICICI Direct and Rajesh Palviya of Axis Securities believe that the short covering has happened at the 11,200 level, which was the FIIs’ average shorting level over the past three months.
The 11200 strike call expiring on September 26 saw open interest plunge by 12.65 lakh shares to 18.99 lakh shares while the call with the highest OI is at 11,500, followed by 11,300. The range of the market which before Friday was 10,800-11,000 has now expanded to 11,000-11,500. Substantial selling or writing has been witnessed across 10900-11300 strike puts expiring this Thursday.
ADVERTISEMENT
The covering of the calls at 11200 and fresh put writing across strikes through 11300 is a bullish sign, said Rohit Srivastava, founder, IndiaCharts.
