F&O Cues: Nifty needs to hold above 24,650; check bullish, bearish stocks

Derivatives market update: FIIs reduced longs in index futures marginally on Monday; their index long-short ratio stands at 1:1. Retail traders up long bets.

The Nifty futures rose by 0.1 per cent on Monday to 24,596. The August-month futures premium compared to the spot Nifty shrinked from Rs 44.50 to Rs 22.8 amid lower trading activity. Mere 1.52 lakh contracts were traded yesterday as against 3.8 lakh contracts traded in Friday's trading session. The open interest (OI) declined by nearly 3 per cent, suggesting possible exits of shorts from the system.

Meanwhile, the Bank Nifty futures slipped 0.3 per cent along side a 2.8 per cent rise in OI on Monday.

FII, DII trading activity - Here's all you need to know about Who bought and who sold?

 

As per data from the NSE, FIIs reduced longs in index futures marginally. FIIs net sold 4,609 contracts of index futures for a consideration of Rs 303.95 crore on August 19. FIIs were net sellers of 3,671 contracts of Nifty futures and 1,497 contracts of Bank Nifty futures.

Pursuant to which, FIIs long-short ratio in index futures remains at 1:1 – this ratio implies that foreign investors now hold 1 long position in index futures for every single bet on the short side of trade. The FIIs longs in index futures stood at 49.97 per cent.

Meanwhile, domestic institutional investors (DIIs) continueto hold 2 short positions for every open position on the long side in index futures. DIIs long-short ratio in index futures stands at 0.53:1; with net longs at 34.59 per cent.

Retail traders increased long bets in index futures marginally yesterday. The index long-short ratio rose to 1.22:1 from 1.18:1 the day before. At the net level, retail traders bought 12,491 contracts in index futures on August 19.

Nifty, Bank Nifty Options Insights

The Nifty options reflects a sideways sentiment, with nearly equal writing of call and put options. A sustained move above 24,650 is needed for the bulls to take control; otherwise, the index may continue to experience sideways momentum, said Dhupesh Dhameja, Technical Analyst, SAMCO Securities in a note.

Significant open interest is observed at the 25,000 call (91.82 lakh contracts) and the 24,000 put (59.03 lakh contracts), with notable activity around the 24,500 puts and 24,600 calls. The Put-Call Ratio (PCR) slightly declined from 1.18 on Friday to 0.99, but the positive outlook remains as the PCR sustains near 1, indicating a positive sentiment in the Nifty, read the note.

In case of Bank Nifty, notable open interest is visible at the 50,000 call (29.15 lakh contracts) and the 50,000 put (21.77 lakh contracts), with significant activity around the 50,600 calls and 50,300-50,200 puts. The Put-Call Ratio (PCR) has declined from 1.04 on Friday to 0.76, indicating a slight bearish sentiment as the index trades below its 20-day Exponential Moving Average.

Bullish & Bearish stocks - here's a list of stocks that saw long and short buildup in trades on August 19

What is long and short buildup? 

In general, a rise in stock price along side an increase in open position is considered as buildup of long positions. Whereas, on the other hand, a decline in stock price with a rise in OI is considered as buildup of short positions.

On Monday, JK Cement, Glenmark Pharma, Metropolis Healthcare and National Aluminium (NALCO) saw buildup of long positions - meaning bullish bets.

Whereas, InterGlobe Aviation (IndiGo), IndusInd Bank, Motilal Oswal Financial Services and Mahindra & Mahindra saw shorts been buildup in the August series.

Stocks in F&O ban period

As many as 19 stocks out of the 181 in the futures & options segment are placed in the F&O ban period. 

Aarti Industries, Aditya Birla Fashion Retail, Balrampur Chini, Bandhan Bank, Birlasoft, Chambal Fertilisers, GNFC, Granules India, Hindustan Copper, India Cement, IndiaMart Intermesh, LIC Housing Finance, Manappuram Finance, NMDC, Piramal Enterprises, PNB, RBL Bank, SAIL and Sun Tv are the 19 stocks in F&O ban today.

Traders are not allowed to take new positions in stocks placed under the F&O ban. Traders are permitted to only exit existing open positions. In case, the any new position is opened during the ban period, exchange levies a penalty on every such trade.

As and when the open interest in the stock falls below 80 per cent of the market wide limit, the stock comes out of the ban period.