Exactly as per our prior observation, On 11 October Nifty and Bank Nifty crashed 300/800 Points at opening and thereafter showed a little recovery. However it ll be incorrect to assume any relief as of now.
Now In continuation to the first part, As on 11 October 18, FII has closed their longs amounting to 10K and have further added 6.3K Shorts. Now the earlier shorting has increased to 97K (approx, mind you, on 17 September it was 44K, and Nifty/Bank Nifty fell 400/1100 points to clear that.)
I presume with Dollar Increasing, IT Sector is a direct beneficiary. And whatever long positions FII had in Index were in IT Sector. However over the past 2 days, even IT sector has started falling. Reasons for falling IT Sector despite rise in Dollar? Some general correction, and bad results. Tata Elexi despite being a direct beneficiary of Dollar failed to post good results. Also, Even TCS posted just in line results. Mind you These 2 companies were exceeding the estimates in all the prior results. As a result Tata Elxsi fell upto 15% on Result day and TCS fell upto 7-8% before posting result (probably due to bad expectations of result).
So, those 10K longs might be pertaining to IT sector which are now being closed. So IT sector might stay in pressure in coming days. Nifty 50 has around 12% allocated to IT Sector. Any drastic fall in IT can drag Nifty big way. The market probably recovered today, so FII could exit their 10K Long positions.
Further, as already informed, shorts have been increased to 97K. (6.3K Added today on 11 October)
If we talk about call Options. FII Have net 44K Calls in comparison to mind blogging 210K Puts. is 5:1.
So when do you take 5 Puts and just 1 Call?
You already know the answer.
Just one advice : Save your money right now. You will get ample of opportunities in the coming month. Trust me ample of.
Feel free to ask queries and share concerns. These are just my thoughts, and my view to the things going around. I hope it Helps.
"So, those 10K longs might be pertaining to IT sector which are now being closed. So IT sector might stay in pressure in coming days. Nifty -1.24% 50 has around 12% allocated to IT Sector. Any drastic fall in IT can drag Nifty -1.24% big way. The market probably recovered today, so FII could exit their 10K Long positions. "
Mindtree, TCS, Infy falling? :)
So FII activity needs to be seen in the context of writing PEs or writing CEs in the index options.
Just in my humble opinion.
And as far as FII Activity is concerned I find futures data is more relevant in comparison to Call/Put Data.
And in respect of CE / PE - I am talking about net bought. But Yes I Acknowledge the fact that some readers might find it difficult to interpret. I will take that points into consideration for sure.
All healthy discussions appreciated :)
BTW: USD will not depreciate v/s the INR to 70 in a day !!!, Its where it is headed, in the future, hence my reasoning about HDFC etc. Again my rebuttle to your post, this is what it is. I hope you take it in the spirit of a healthy discussion. if wrong, It would be a learning experience, as always.
Would love to hear your views about about why the HDFCs should not be going up as a re- rebuttle to my point.
Also, Let me share a deep secret with you. Many a times, Big Intraday moves comes in Indexes when FII becomes buyer. If you see 300 Points up and then 300 Points down. Feel free to presume that the high buying volumes are directly associated with FII purchasing option.
Example : As a norm, If PCR is more than one i.e. Total Numbers of Puts written are higher than Calls, the market is expected to go. But alot of times we witness that market aggressively goes down towards the Put of Highest Open Interest breaks it, creates an unwinding over there and switch direction again. (Intraday). In these scenario, FII are buyers of PE. This was witnessed constantly in Feb-March session during Budget.
Also, I am researching on this, the movement of VIX has some correlation with FII buying.
I am not saying whether the movement of HDFCs will be up or good. Hypothetical situation of HDFCs / Reliance rising and taking entire market up is not acceptable. Share charts / reasons. Then I will definitely share my point of view.
PS : Learning is always a first priority:)
ftures pric is a function of cash/spot price? ,,,, are spot prices affected by future price or future price by spot ...r else spot prices ar being manipulated?