F&OTracker Market may Move in a Range Till May-end
Traders have been mostly unwinding their positions in options segment and these are mainly domestic participants who have been betting on big moves post election verdict in anticipation of favourable outcome. There has been significant accumulation of options since beginning of the May series and that too mainly in call options and, hence, PCR-OI has been at low levels of 0.77.
Most of the options buyers are stuck in strikes ranging from 7500 to 8000. And we believe that in initial part of the new series, PCR-OI would again bounce back above 1 levels as put writers have again become active, which is evident from falling implied volatility and rise in put activities.
Till the end of the May series, we believe market may move in a broader range of 7150 on the lower side and 7450 on the higher side. Market would not see lot of support coming from domestic participants who have been on the sidelines in this entire run or either been selling into equity. Any significant dip is unlikely and, for this series, upside would meet with some profit booking. Participants should not make mistake of considering this profit booking as distribution.
Though FIIs have been selling in the cash market since the last few days, we believe it’s more of profit booking in arbitrage positions rather than selling of portfolio. They have been going long in index futures, but the quantum of buying is not very significant to lead to fresh breakouts in market. For remaining part of this series, the market would be in a range and one should adopt stock specific approach.