Short Covering Day: 28 Nov 2011
Today was a day of short covering. Nifty December Futures opened with a bang didn’t go below at all and shot up to 4875 finally closing at 4870.30 up by whooping 159.35 points. Bank Nifty December Futures too followed winning streak and after opening with gap made a high of 8822 and finally closed at 8809.90 up by 325.15 points. Volumes were lower than yesterday in both the indices on all fronts viz traded quantity, no. of contracts and traded value. Open Interest in Nifty across all the series came down by 4 lac shares and that of Bank Nifty came down by 1.60 lac shares. Put Call Ratio was steady at 1 and volatility as measured by India VIX was at 26.65 down by 8%.
Top five individual stocks which attracted higher volumes were SBIN, ICICIBANK, TATASTEEL, TATAMOTORS and REKIANCE. Top five gainers were EDUCOMP 16% FINANTECH 14% JSWSTEEL 11% HINDALCO 10% and NCC 8%. Top five losers were CESC -5% PANTALLON -5% CUMMINSIND -3% SUNTV -2% and AUROPHARMA -2%.
Top five individual options which attracted higher activity were SBIN 1800 CE SBIN 1700 CE SBIN 1750 CE TATASTEEL 400 CE and SBIN 1700 PE.
Nifty Option Series where POSITIVE change in Open Interest was seen were 4900 CE ( 2.20 lk) 5000 CE (4.44 lk) 5100 CE (5.35 lk) 5200 CE 92.50 lk) 4500 PE (5.60 lk) 4600 PE (7.91 lk) 4700 PE (9.76 lk) 4800 PE ( 8.60 lk). Nifty Option Series where NEGATIVE change in Open Interest was seen were 4700 CE ( -3.13 lk) 4800 CE (-4.70 lk) 4000 PE (-3.69 lk). Open Interest in Out of the Money Call Option was 3.13 Cr shares and that of Put Option was 4.4 Cr shares. Open Interest in In the Money Call Option was 82.47 lac shares and that of Put Option was 1.26 Cr shares.
My prognosis still remains bearish for long term. Today’s price movement can be best considered as dead cat bounce which might continue for a day or two. Weaker shorts got covered today as Open Interest has come down but not in a big way. As said in yesterday’s post those who ventured a Bull trade today eventually benefited as their Price objective of 4850 got realized today. Any way as long as Nifty remains below 5050 level it is advisable to short Nifty with initial price objective of 4650 levels and stop above 5050.
Happy Trading
Atul Doshi
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