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The Nifty 50 (17,332) posted a second consecutive weekly loss by depreciating 1.1 per cent last week. The Nifty Bank (39,555) recorded the biggest weekly decline of 3 per cent since the week ended June 17 this year. The price action of both indices denotes bearish bias and likewise, the derivative data, too, hints at bears taking control of the rudder.
Nifty 50: The cumulative Open Interest (OI) of Nifty futures on the NSE increased to 141 lakh contracts on Friday compared to 135 lakh contracts a week ago. This occurred with a price decline and that means there have been short build-ups over the past week. The Put Call Ratio (PCR) of September monthly expiry options stands at 0.63 and at 0.76 for options expiring October 6 (weekly series). Meaning, there has been a good amount of call writing and this denotes that the short-term trend could well be bearish.
Nifty Bank: Similar positioning can be observed with respect to Nifty Bank. The cumulative OI of the Nifty Bank futures on the NSE shot up to 27 lakh contracts on Friday versus 24.1 lakh contracts by the end of the preceding week along with price drop. Also, the PCR of Nifty Bank options expiring on September 29 (monthly expiry) and on October 6 (weekly expiry) is at 0.54 and 0.64 respectively. These numbers give a bearish outlook for the index.
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