Paytm, Angel One, Kalyan Jewellers among 6 stocks with huge short build-up

Retail investors most bullish in last 7 months, with long-short ratio in index futures at 5:2. On the other hand, FIIs hold 5 bearish bets in index futures for ever long trade; shows NSE F&O data.

With the markets in a downtrend several stocks have logged back-to-back losses in the recent trading sessions. Data from NSE futures & options market shows, that 33 out of the 223 stocks in the derivatives segment logged a net loss in the last four trading sessions; with a majority of them i.e. 30 out of these 33 stocks seeing an over 10 per cent increase in open interest (OI).  In general, a dip in price accompanied with a corresponding increase in open position (interest) is considered as build-up of short position at the particular contract.  Meanwhile, the NSE Nifty 50 index had ended last week with a loss of 2.4 per cent at 23,432. The Nifty January futures were down 0.6 per cent on Friday while the OI also dipped by 0.7 per cent. However, over the last four trading sessions the Nifty January contract has seen near 9 per cent increase in OI amid the declining trend.  NSE data shows that Tata Exlsi has seen a huge 63.5 per cent increase in OI, while the stock dipped by 8 per cent. On Friday along the stock was down 7 per cent on the back of 33.5 per cent rise in OI.    Among others, in the last four trading sessions, CESC has shed 7.2 per cent while the OI jumped by 44.3 per cent. Paytm tumbled 12.5 per cent amid a near 40 per cent surge in OI. Kalyan Jewellers has cracked 16.5 per cent while the OI rose over 35 per cent.  Similarly, Angel One and JSW Energy too witnessed an over 27 per cent increase in open positions, while the respective stocks logged an 8.2 per cent and 10.2 per cent fall.  Category-wise bets on Nifty / Index futures  Data shows that retail investors are most bullish at current juncture, with the long-short ratio in index futures at a seven-month high. An analysis of F&O data reveals that retail investors index futures long-short ratio now stands at 2.53 - implying 5 open positions on the long (bullish) side of trade as against 2 short (bearish) bets.  Retail investors were this bullish last on June 04, 2024, the day of Lok Sabha Elections results, with a long-short ratio at 2.45.  On the other hand, foreign institutional investors (FIIs) continue to hold heavy short positions with index futures long-short ratio at 0.19. This ratio implies that FIIs hold 5 short positions for every long trade in index futures.  Data shows that FIIs OI in Nifty futures alone has increased by 20 per cent in the last four trading sessions; while the total OI in index futures has increased by 16.9 per cent in the same period. FIIs OI in Bank Nifty and    MidCap Nifty futures has risen by 16 per cent and 8.8 per cent, respectively. Thus suggesting an overall negative bias on the Indian stock market for now.  Analysis of the Nifty options data too suggests softening sentiment, with aggressive call writing and reduced put interest.  "Aggressive call writing in the 23,500 – 24,000 range signalled diminishing buying interest while unwinding put positions underscored mounting bearish sentiment. The Put-Call Ratio (PCR) edged up from 0.65 to 0.73, reinforcing a prevailing bearish tone. The max pain point stands at 23,700." said Dhupesh Dhameja, Derivatives Analyst at  SAMCO Securities.  A sustained dip below 23,270 would expose the Nifty to further declines toward 23,000. The broader trend remains bearish, favoring a "sell-on-rise" strategy as buyers struggle to sustain gains at elevated levels, Dhupesh added.