Indian equity benchmarks may have remained rangebound on Tuesday, but foreign investors were busy selling index futures and increasing their bets on a correction. They bought higher number of index puts in comparison to index call option contracts.
There was little change in the Nifty's May futures open interest but unwinding was witnessed in Nifty Bank's futures indicated by drop in open interest by 3.9 percent. Foreign investors sold index futures worth Rs 713 crore on a net basis.
The India Volatility Index (VIX) rose 5.4 percent to close at 11.44 despite consolidation seen in major indices. This reflects expansion in option premiums as traders buy index options in anticipation of volatility. The 9,200 put was the most active option with considerable writing seen.
Maximum open interest remains with the 9,000 put and the 9,500 call to indicate a near-term range for the Nifty. Foreign investors bought 7,403 index puts against 3,361 index calls on a net basis signalling caution.
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