Unwinding of longs by FPIs signals caution on indices
While analysts like Rohit Srivastava of IndiaCharts and Rajesh Palviya of Axis Securities maintained the trend was bullish, they differed on the prospects of financials, with Srivastava expecting the Bank Nifty to lag the Nifty’s performance.
The Bank Nifty Friday traded marginally above 22,418, its 38.2 per cent retracement from the record high of 32,613 on December 30 to its multi-year low of 16,116 on March 24.
Mumbai: Foreign portfolio investors’ liquidation of long index futures to the tune of 18,783 contracts on Friday bodes caution for the market going forward. Though they have been net buyers of a provisional 2,476 crore of shares this month, Friday’s liquidation of index futures suggests they have taken substantial profits off the table.
From being net long 21,432 contracts in Index futures — Nifty and Bank Nifty — a day earlier, they ended Friday being net long a mere 2,649 contracts. This was reflected in Bank Nifty active futures’ open interest dipping 9 per cent along with a 2 per cent fall in the index. The Nifty futures too witnessed OI drop 6 per cent along with 0.2 per cent correction in the broader index — signs of long liquidation. While analysts like Rohit Srivastava of IndiaCharts and Rajesh Palviya of Axis Securities maintained the trend was bullish, they differed on the prospects of financials, with Srivastava expecting the Bank Nifty to lag the Nifty’s performance.
The active Bank Nifty options’ open interest put-call ratio dipped to 0.84 Friday, from 0.96 a day earlier, hinting that traders sold relatively more calls than puts in expiry week, betting against a rise. The Nifty’s PCR was at 1.48, suggesting greater optimism.
The Bank Nifty Friday traded marginally above 22,418, its 38.2 per cent retracement from the record high of 32,613 on December 30 to its multi-year low of 16,116 on March 24. A break below this could lead to immediate support of 22,000.
