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19th May 2015 – FII Activity details mentioned below. In the cash market today, FII’s bought 48 crores stock whereas DII’s bought 451 crores worth of stock. In the derivative market, FII’s bought 647 crore of Index futures and bought 1048 crores worth of Index options. In the Stock futures segment, FII’s bought 327 crores worth of stock futures and sold 66 crores of stock options. Today was a day of consolidation in the market. Both Nifty and Bank Nifty started with a negative bias, recovered in the morning session and again fell in the afternoon session. Ease of movement in both indices was towards down side. It was slightly concerning to see mid day volatility returning as most of the signs were pointing towards minimum volatility going ahead. Clear trending moves are lacking mainly due the sector profile of market. High beta stocks are lagging and defensive sectors are leading. High beta sectors in command would lead to consistent WRB’s on the upside.
While we are still long in the market, we have reduced our positions to about 25% from 40% and we have also created adequate hedge today to protect our positions in case we get 1-2% fall in short term. Markets have uncanny habit of repeating itself and based on this month’s volume – price behavior, it seems wise to create hedges. In this month, high volume bars have resulted in short term reversals in trend. Refer to the chart below. Each time high volume bar is created, it has led to short term reversal of minimum 2%. Similar high volume bar got printed today at 18400 (futures). Losing premium on hedges is far better than losing on futures. Market is also dicey at this moment and can go anywhere. Our bias still remains on the up side but we are cautious and hence are hedging positions. If price moves up, we will scale in again. Expect a WRB (wide range bar) tomorrow.
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by Ebrahim Mafooz
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