MUMBAI: In extremely choppy trade, National Stock Exchange’s 50-share Nifty tumbled 3.23 per cent to end at 2706.15 on Wednesday while Nifty January futures provisionally ended at a discount of 29 points to spot. “We don’t know how the situation will be in near term as the economy continues to deteriorate. At present we are adjusting our positions as per our risk appetite. With the global economy persistently refusing to recover, we expect Nifty to drift lower and may touch 2500 levels,” said a Mumbai based trader.

Players have created short positions in index and frontline heavyweights. The Nifty contract price fell 3.52 per cent while open interest added 34 lakh shares. A widening discount coupled with rising open interest indicates huge build up of shorts in the contract. The sell quantity was five times that of buy quantity. The cost of carry was negative at 48.13 per cent.

Huge unwinding of long calls was seen at 2800 strike and significant call writing was observed at 2700, 2900 and 3000 strikes. On the other hand, enormous unwinding of short puts were seen at 2700 strike while modest put writing observed at 2600 and 2500 levels. The options data indicates a very tight range for markets in near term.

“I am little surprised by the amount of short build up in the Nifty January contract. Significant shorts are being built in frontline stocks like Reliance, ICICI Bank, HDFC and L&T. Though we expect dismal performance from frontline companies, global cues are mixed and may turn positive on stimulus expectations. Traders and investors need to play cautiously with strict stop losses. Don’t over leverage,” said Jonathan Paul, senior analyst at Krug and Bordman Advisory.

Reliance Industries attracted significant short positions on Wednesday as analysts expect a drop of 20 per cent in the company’s profitability. Reliance January contract fell 5.57 per cent while open interest added 4.79 lakh shares. L&T futures dropped 3.05 per cent adding 4.7 lakh shares in open interest.

NTPC slipped 3.16 per cent while open interest added 31.94 lakh shares. Educomp slumped 16.56 per cent. ICICI Bank tumbled 7.82 per cent while open interest added 29 lakh shares indicating short build up. State Bank of India skid 2.87 per cent and HDFC plummeted 8.43 per cent.

Total F&O turnover on NSE was Rs 43,026 crore, up 21 per cent from Tuesday.

source: Economictimes

Tags: calls, daytrading, free calls, intraday, tips

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