F&O trends: Buying seen in ITC, UBL; Shorts added in L&T, HUDCO, 8 others

The NSE derivatives data show that FIIs continue to hold a bearish bias, with 8.5 short positions in index futures for every long bet.

The NSE Nifty 50 index has witnessed wild swings in the first three trading sessions of the February series, mainly on account of the Union Budget, and global market reaction to the US triggered tariff war. The net result for the Nifty remains tepid. The NSE data shows that the Nifty February futures has gained 0.1 per cent in this period, while the open interest (OI) has declined by 1 per cent.  Interestingly, foreign institutional investors (FIIs) have been net sellers in the last three trading sessions in index futures in the derivatives segment; with net sales of 11,108 contracts.  As per the NSE derivatives data, FIIs long-short ratio in index futures is at the lowest point at 0.12 in more than a year. This ratio implies that FIIs now hold 8.5 short bets in index futures for every long position. In comparison, for much of the January series FIIs were seen holding 5 short positions in index futures for every long bet.  Meanwhile, among other participants retail investors' long-short ratio in index futures stand at 2.5; proprietary trades at 1.8 and domestic institutional investors (DIIs) at 1.4.    On Monday, the NSE Nifty slipped 0.5 per cent amid the global sell-off in a volatile trading session.  Technical outlook on Nifty  Technically, despite of high volatility, the Nifty defended its 21-day Simple Moving Average (21-DSMA) support and formed a hammer candle on a daily scale, indicating strength, says Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.  The 21-DSMA is placed near 23,270 levels, which will act as immediate support for index followed by 23,000 levels, while 23,640 will serve as short-term resistance for index. As long as the index holds 23,000, traders are advised to follow a buy-on-dips strategy, the analyst said in a note.  Stocks with long-short bets  According to the NSE derivatives data, United Breweries (UBL), HFCL and ITC are the three stocks with significant long build-up. Data shows that UBL stock futures has gained nearly 6 per cent in the first three trading sessions of February, while the OI has increased by almost 67 per cent; thus implying likely long build-up.  Similarly, HFCL and ITC have rallied around 5 per cent each in the same period, while the OI have risen by 50.6 per cent and 42.3 per cent, respectively.    On the other hand, HUDCO has seen a notable short build-up, with the February stock contract down 7 per cent alongside a near 87 per cent surge in OI. Engineering major, ABB has slumped almost 15 per cent in these three days, while the OI has shot-up by 56 per cent. Thus, implying likely short build-up at these counters.  Among others, there are 8 F&O stocks which have witnessed an over 5 per cent fall in the first three trading sessions of the February series, coupled with significant rise in OI. APL Apollo, NCC, IRFC, Larsen & Toubro (L&T), Jindal Stainless, JSW Energy, HPCL and Ambuja Cement are the 8 stock futures. 
 

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