In another day of consolidation, the Nifty 50 index retreated 0.4 percent on Thursday, but held on to the 8,700 level. Its October futures showed some unwinding of positions with a drop of 0.9 percent in open interest. The Nifty Bank index, which declined by 0.6 percent, saw fresh selling with its futures open interest gaining 5 percent.
Foreign institutional investor (FII) participation in index futures remained subdued with buying of Rs 32 crore on new basis. The India Volatility Index (VIX) declined marginally by 0.6 percent to 14.83.
The 9,000 call and the 8,600 put continued to hold maximum open interest. Some writing was seen in the 8,900 call and the 8,400 put. FIIs bought 7,655 index put contracts and unwound of 4,717 index call contracts on a net basis.
In the past two weeks Nifty has been struggling to move higher, in fact strategy on the street seems to be changing from “buy on dips” to “sell on rally”. Nifty is gradually slipping into a “lower top, lower low cycle” which is indicating some downward pressure may continue at current juncture. Crucial support is placed at 8,690, which corroborates to the 50-DMA. If support is breached on closing basis, then 8550 levels cannot be ruled out”.Hadrien Mendonca, senior analyst at IIFL told BloombergQuint.
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