FUTURES & OPTIONS

Mirroring the weakness in the underlying cash segment, derivative segment witnessed addition of fresh short positions during the week ended.

True to predictions and indications from sentiment indicators like implied volatility, put/ call ratio, open interest and VIX; sharp vicious correction was seen.

VIX surged by 33 per cent on week-on-week basis and closed at its six-month high.

According to option data, the highest OI concentration in calls is at 10,000 strike, while in puts 9,500 strike has the highest OI concentration. Expect heightened volatility to continue for some more weeks. Sell on rallies should be the strategy for present, say punters.

All the sectoral indices closed in the red. Realty, Banking, Healthcare, Cement, Oil & Gas, Auto, Capital Goods, FMCG and Power stocks were the major draggers.

Defensive buying was seen in select IT and Metal counters.

Results of SBI reveal that the merger of the subsidiaries was an expensive process. Management’s comments and outlook, that the year ahead will be less painful should put to rest some concerns of investors.

Accumulate during the present correction for medium term.

Recovering from demonetisation and GST blues, FMCG stocks are expected to get boost from good monsoon spurring rural demand. Buy HUL, Dabur and Marico.

According to the medium-term expenditure framework, revenue spending is expected to go up 20 per cent, and capital spending by nearly 26 per cent from 2017-18 to 2019-20, with an increase in the overall expenditure forecast at 21 per cent. Use declines to accumulate good counters in Capital Goods and Infrastructure sectors.