The Nifty ended lower for the second consecutive day on Tuesday. It shed 11.9 points to close at 8,131.7. Derivative data suggests Nifty is likely to hold the crucial 8100 levels on Wednesday.
Open interest (outstanding position) in the Nifty October futures has shed by 3 lakh shares while the premium on the future has increased to 7.1 points from 6 points earlier; clearly, some of the short positions created over last couple of trading sessions have been covered.
On the options front, 8,300 and 8,400 strike options have witnessed reduction of open interest by 4.3 lakh and 2.7 lakh shares respectively. This indicates bears are losing confidence and booking profit in the 8,300 and 8,400 strike call sold earlier in the month.
Among Nifty puts, open interest continues to be high in 8,000 and 8,100 strike puts indicating support for Nifty around 8,100 levels. However, open interest reduction in in-the-money(options having positive intrinsic value) 8,200 and 8,300 puts by 13 per cent and 11 per cent respectively indicates that traders expect Nifty to remain in 8,100-8,200 range in the near future.
Overall, puts have added 7 lakh shares to open interest while open interest in calls have been shed by 5.6 lakh shares pushing the put-call-ratio (PCR) higher to 1.02 compared to 1.01 earlier. A PCR of more than 1 indicates bullish outlook for the market.
The India VIX or the volatility index shed 5.79 per cent to 18.015 suggesting confidence among bulls to take long position.
Among individual stocks Dabur witnessed addition of bearish bets while Reliance Capital witnessed addition of long positions.