Buying ebbed in the derivatives segment, with the turnover declining to Rs 28,943 crore from the five-day average of Rs 33,000 crore. The open interest in Nifty May futures therefore rose by a marginal 0.5 per cent despite trading volumes of 3.39 lakh contracts.
The volumes in the options market were dull. The activity in call options was limited to the 5100-5200 strike prices, where call writers booked some profits.
The put options at 4800, 4900, 5100 and 5200 strikes witnessed short covering, while there was fresh put writing at the strike price of 5000. This indicates indecisiveness among the market participants.
Option activity suggests range-bound trading between 5000 and 5200. Upsides near the 5200-5250 levels are likely to invite fresh short positions and hence it is advisable to write calls above 5300.
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A substantial built-up in put options at the 5000 level indicate that the bulls are confident that this level will hold, going forward. The Nifty PCR declined further from 1.40 to 1.35 due to covering of in-the-money puts and fresh writing of in-the-money calls.
Though the rupee weakened further, the derivatives traders covered their longs in front-line technology stocks.