Homemarket News

    Has shorting the index become too easy?

    Has shorting the index become too easy?

    Has shorting the index become too easy?
    Profile image

    By Nigel D'Souza   IST (Published)

    Mini

    Has short trade become too easy? Is a bounce on the Nifty in store? These are the key questions the traders are seeking the answers to.

    Has short trade become too easy? Is a bounce on the Nifty in store? These are the key questions the traders are seeking the answers to.
    The bulls on Friday will again try their chances as the Nifty has lost more than 280 points this week and as the dollar index has cooled to less than 94 levels which could reflect rupee strength.
    So is there a pull-back in store? Possibly yes!
    Contra long positions
    For a second data running the premium on the Nifty expanded despite the fact that the index ended at days’ low. On Wednesday, the Nifty September Futures expanded to 38.45 points vs 31.3 points.
    Foreign Institutional Investors (FIIs) add net longs for second straight session
     Though FIIs continue to be net short on the index futures, in the past two sessions, they have bought 18000 long contracts.
    Put Call Ratio (PCR) trends lower indicating oversold levels in near term
    We have seen the Nifty bounce when the PCR moves towards the 1.1 mark as call writing becomes too easy. Nifty PCR now is at 1.14 from 1.19 on Tuesday. 
    Why is protection of the 11200 mark important on a closing basis? 
    • Failing to hold on to 11200 mark opens up possibility of 11000.
      • Bounce to 11350 will be used as a selling opportunity as the 11300 call has seen aggressive writing and a move above 11350 could make these writers nervous.
      • So has the short trade become too easy?
        FII selling continues owing to weak macros and uncertainty around where the rupee will stabilise and as the data indicates the FII net selling has outweighed the DII net buying by nearly two times.
        • FII net sell is Rs 2185 crore in the cash market.
        • DII net buy is Rs 1201 crore in the cash market.
        • Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
          arrow down

            Most Read

            Market Movers

            View All
            CompanyPriceChng%Chng