F&O Cues Reflect Strength As Nifty Tests 20,000
The index continued to trade above key moving averages, including the 50-day and 20-day exponential moving averages.
Cues from the NSE’s derivatives market projected further strength even as its benchmark index, the Nifty 50, recorded a new life high and moved above the 20,000 mark intra-day on Monday.
The Nifty 50 index advanced for the seventh straight session. The index continued to trade above key moving averages, including the 50-day and 20-day exponential moving averages.
While short positions in the Nifty September futures—expiring on Sept. 28—were covered last week, this was followed through by fresh long positions built in the derivative on Monday, as indicated by an increase of 2.2% in the futures’ open interest.
The move forced traders to cover short positions in the Bank Nifty futures too, as indicated by the 1.2% decline in its futures open interest as it advanced in tandem with the Nifty 50 through the course of the day.
There has been a shift in the lower end of Nifty’s range as maximum open interest has now moved from the 19,800 put—Sept. 14 expiry—to the 19,900 put, which now stands at 88.6 lakh shares.
This means that options sellers are now open to taking risks by writing higher-level options. The indicative upper end of the range stayed unmoved, however, with maximum open interest on the call side remaining at the 20,000 strike—Sept. 14 expiry—with over one crore shares.
