Bank, realty and technology stocks led a sell-off on the bourses with realty being the worst performer, down 4.2 per cent while the BSE Bankex and IT index fell by 3.5 per cent each. On the derivatives segment of the National Stock Exchange, the Bank Nifty futures declined by 3.05 per cent on unwinding of long positions, while the CNXIT futures declined by 3.1 per cent on fresh build up of short positions.
The Nifty witnessed a gap-down opening of approximately 100 points as suggested by the SGX Nifty. As of September 4, foreign institutional investors (FIIs) have unwound some of their index futures positions, bought options and went short on stock futures, which triggered a major fall in the market.
Trading volumes on the derivatives segment for the day suggests that F&O players were not keen on building fresh positions in index and stock futures. However, these players were seen buying index options to hedge their positions in index futures. Among options contracts, 4400, 4500 and 4600 strike calls have an open interest of 9.36 million shares, which is 55 per cent of the total open interest in call options.
The Nifty September futures added open interest of 748,450 shares while its premium to spot increased from nine points to 14 points. Since index futures are trading at a premium, the increase in open interest may be on account of long build up at lower levels.
The September futures of the Bank Nifty witnessed covering of long positions during intra-day trades, but saw a fresh build up of shorts during the close out session. Among bank futures, open interest in Axis Bank was up 68 per cent while stock futures declined by 6.43 per cent. ICICI Bank was down 4.2 per cent while open interest was up 11 per cent.