The Nifty 50 (15,752) and the Nifty Bank (33,539) closed almost flat last week. While the former gained by a marginal 0.3 per cent, the latter was down by nearly 0.3 per cent.
The derivatives data do not indicate a clear bias, and this has been the case for the past couple of weeks. This might be an indication that both the indices could be heading for a consolidation phase.
The cumulative open interest (OI) of Nifty 50 futures on the NSE declined to 134.4 lakh contracts on Friday compared to 143.5 lakh contracts a week ago. But compared to 133 lakh contracts a fortnight ago, it has largely remained the same. Although there was considerable increase in OI in between, those were liquidated.
However, the price has gone up in this period. Therefore, the shorts that were created in the first half of June are being liquidated. The Put-Call Ratio (PCR) of the nearest weekly expiry Nifty 50 options is at 1.07 indicating that the number of outstanding OI in call and put options are almost equal. This shows indecisiveness among the participants.
That said, in the Nifty Bank futures there are clear signs of short covering. The cumulative OI decreased to 27.1 lakh contracts compared to 29 lakh contracts a week ago. It stood at 31.4 lakh contracts two weeks ago. Nifty Bank rallied in this period, hinting at short covering. The PCR of nearest expiry weekly options on Nifty Bank is at 1.06, like Nifty 50 options.
Hence, there are no clear indications about the next leg of trend in indices.
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