The Hindu Business Line : Open positions decline for Reliance Petro, REL

Turnover dipped to Rs 38,107.72 crore at the F&O segment on Tuesday against Monday’s figure of Rs 41,000.8 crore. Nifty May future maintained the premium with respect to the spot close and closed at 4966.45 against the spot close of 4957.80. It also added about 3.6 per cent in open interest positions.

Among the options, Nifty 5000 strike was the most active. Both call and put added open interest positions, indicating confused mindset of investors.

This was also captured well by the rising Indian volatility index or VIX, which surged to 33.43 per cent, the highest level in May. Volatility Index is a good indicator of the investors’ perception on how volatile markets are expected to be in the near term. When the market is range bound or has a mild upside bias, volatility is globally observed to be typically low.

On such days, call option buying (a position taken on the view that the market will move higher) generally outnumbers put options buying (a position taken on the view that the market will move lower). This kind of market may indicate lower risk. Conversely, when the selling activity increases significantly, anxiety among investors tends to rise. Investors rush to buy puts, which in turn pushes the price of these options higher. This increased amount, which investors are willing to pay for put options, shows up in higher readings on the volatility index. High readings indicate a higher risk market place. Volatility index can also be used as a contrarian indicator.

Stock futures

Reliance Industries, Cairn India, Reliance Petroleum were the top-3 traded counters. Reliance Petroleum and Reliance Energy shed open interest of 6.3 per cent or 37.13 lakh shares and 8 per cent (2.71 lakh shares) respectively. Reliance Industries also saw open interest positions decline by 2.5 per cent.

FIIs buying

Overseas investors remained net buyers to the tune of Rs 617.15 crore in the F&O segment on Tuesday, mainly on account of their net buying in index futures.

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