Expect volatility in the upcoming week: Angel Broking

Ms.Sneha Seth (Derivative Analyst, Angel Broking): “The benchmark index began today’s session on a flat note; however attracted profit booking thereafter ahead of long weekend. Eventually, market extended its loss in the latter half to conclude Friday’s session with a cut of 55 points. On derivatives front, Nifty and BankNifty open interest increased by 3.97% and 0.48% respectively.

As far as Nifty options activity is concerned, 9600 and 9700 call options added significant positions and we believe these are long positions formed by retail participants. On the flip side, we hardly saw any relevant build-up in put options; however, good amount of unwinding was seen in 9400, 9600 and 9700 strike. One of the important observations in today’s session, implied volatility of call options was higher than that of puts, which is rare and positive for market. Maximum concentration of open interest is visible in 9700 call and 9500 put options.

Stocks that added longs are MINDTREE, RELCAPITAL and PIDILITIND. While, fresh shorting was visible in ADANIPOWER, ANDHRABANK, PFC, BHARATFORG and VOLTAS.

Today, despite market being under pressure, FIIs were net buyers in cash market and index futures. They bought equities to the tune of Rs. 270 crores. While, long positions were formed in index futures worth Rs. 898 crores. In Index Options segment, they bought put options in order to hedge their longs in index futures. Also, we are witnessing positive move in Nifty in expiry week from last six months; and since the overall data remains positive, we would suggest traders to use decline to buy 9600 call options for current expiry.”