Mixed signals on the Street

F&O OUTLOOK

There are no reliable buying or selling signals. While there has been buying in put options at the strike prices of 4000-4300, the 4300, 4400, 4500, 4600 and 4600 call options have also witnessed huge buying accompanied with a high open interest build-up of 3.34 million shares.

The put options point to weakness and the call option buying suggests the possibility of a bounceback after consolidation around 4300.

The 200 per cent jump in Nifty September rollovers shows that foreign institutional investors continue to hold substantial short positions in the index futures.

The Nifty open interest stood at 31.23 million shares on expiry day compared to 27.05 million shares during the same time last month. High rollovers have historically led to weakness and considering the short build-up by FIIs, the market sentiment is likely to be weak in the new series.

The Nifty opened on a negative note on Thursday and traded in a lacklustre manner through most of the session.

After being stuck in the 4250-4300 band, the index broke the lower end of the range in the final hour and ended below 4250. This is a weak signal. And a break below 4200 in the near term could lead to further bearishness.

The markets have corrected on expected lines and broken the recent lows, accompanied with huge volumes. The Nifty PCR open interest at the 4200 strike price is 5.5, which suggests that the index has a strong support at 4200.