The Sensex and Nifty closed at two-month highs on Friday as a result of across-the-board buying by foreign institutional investors (FIIs) in the derivatives segment. The FIIs were net buyers of Rs 658 crore in the cash segment on Friday, adding 43,686 index futures and 20,030 index options contracts.
The Nifty May futures contracts added open interest of 22.72 lakh shares and the premium increased from 14 points to 18 points, which shows that no short positions were created during the week.
The FIIs were net buyers of index futures and options on all the four trading days of last week. They apparently went long on the Nifty and hedged their positions by buying put options.
Short positions were seen on the cement, capital goods, metals and telecom counters, whereas fresh long built-up took place in realty, automobile, pharmaceuticals and technology stocks.
The stock futures of KPIT Cummins, Alstom Projects, Welspun Gujarat and Grasim Industries declined by over 10 per cent on fresh OI built-up, indicating short positions. We may see a further correction in these stocks next week.
A huge built-up in long positions was seen in Sesa Goa, Bombay Dyeing, Praj Industries, Mahindra Gesco and HDIL. These futures have appreciated by over 15 per cent each and are expected to move up further next week.
The Nifty PCR (put-call ratio) declined from 1.24 to 1.20, indicating the purchase of more call options. The options data shows fresh writing of out-of-the-money calls (5300-5500 strike prices), indicating resistance for the Nifty around these levels going forward.
