Below is my Interpretation of FII OI data Sheet for 26 Dec.
1. FII bought 12,404 Contracts in NF worth 272 Cores in Index Futures with Open Interest increasing by 4984 contracts.
2. As NF was up by 68 points with Open Interest increase by FII . Rise in OI with Rise in price means longs were created by FII .
3. Net Exposure of FII for the December Series is 42,958 contracts which i am assuming are longs. Now this figure will be shocker to hard core bears as doomsday Sayers were predicting a fall till 4300,4100 in Nifty Future in Dec Month.
4. Today rise was on volumes 2.75 Lakh NF contract which is the lowest traded value for December series, so today can be categorized as uneventful,boring day as after the initial rise in morning nifty was almost grinding in 20 point range throughout the day.
5. The reason for such tight range of 10 points can be answered if one sees the FII Option Open Interest which is at 20 Lakh contract,FII have shorted puts heavily from 16 Dec the day we broke the scared 4630. The day was having high volatility and bearish environment and they want to use the time decay to eat option premium such days are used by FII to write option.
FII has sold options worth 1630 cores on 16 dec and if one sees NF close from 16 Dec ie. 4752 till 26 Dec ie. 4787 we moved just 35 points but Options Premium of 4700 PE has comes down from 150 to Rs 17 ie almost whole premium is eaten by the writers.
So now i hope the reason is clear why we are having such rangebound moves.
6. Once FII covers the whole Options we would move out of this trading zone and will again start the trending moves.
7. NF total OI was at 1.5 cores with 11.44 lakh reduction means traders who took short bet on weekend and today morning session on anticipation of a continuation of decline in market and have just liquidated there bets.
8. Rollovers have started and today we saw a 12 Lakh addition in OI in Jan Series means the whole OI reduction of Dec series got rollovered to Jan series.I am assuming these are longs as we have seen an addition of additional 1 lakh in Jan series with price rising it should be longs only.
9. In Equity cash segment FII bought 113 cores whereas DII sold 119 cores.
7. As per Options data 4900 CE has highest OI of 75 lakhs addition of 3.3 lakh and 4500 PE has highest OI of 72 Lakhs covering of 81k. So 4500 becomes support and 4900 becomes resistance.
Highest OI in 4900 CE will be real test of Bulls as Maximum Shorts in December series are in range of 4750-4910 and today we have closed above the crucial 4756 level which means shorts are in pain as of today. Now Bears do not want Nifty to move above 4900 coz as and when it happens it will lead to full fledged short covering in NF and i will not be surprised to see an expiry above 5000.
8. 4400 PE saw a liquidation of 10 lakh in OI today as FII have started covering there shorts in Puts at various strike price.
9. Addition in OI was seen in 4700-4800 PE with 4800 PE adding whopping 15 lakhs in OI, So traders are getting confident 4800 will get breached tomorrow .
10. Interestingly 4800 CE also added 5.5 lakh in OI, so real fight for 4800 will start tomorrow .4810-4830 has been an important resistance for December series.
10. FII SAR level comes at 4717,It increased dramatically from Friday’s SAR of 4643 which gives me confidence FII were buyers today in NF.
11. Average Traded Price for NF is 4816 for December series which becomes the potential resistance for further upmove to add to it its 50% retracement level from high of 5099 to low of 4631.
12. Nifty closed above 4756 and positional shorts should not be carried forward.
13. On Upside above above 4796 Nifty Tgt 4813,4831 and 4874.
14. On dowside below 4755 Nifty Tgt 4738 ,4718 and 4692 (Nifty Spot Level)
Let me go by Disclaimer these are my personal views and trade taken on these observation should be traded with strict Sl
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