Any rally in Bank Nifty likely to be sold into

Any rally in Bank Nifty likely to be sold into

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The weekly Bank Nifty (February 8 expiry) put call ratio (PCR) hovers at 0.54, meaning traders have sold only 54 puts for every 100 calls sold.

Mumbai: Buying by domestic institutions helped the benchmark indices recover from the day’s lows on Monday, but the Bank Nifty still looks weak and analysts expect any likely bounce would be sold into. They cite hardening of bond yields and RBI probably changing its stance from neutral to cautious, albeit not hiking the repo rate, at its policy meet Wednesday.

“A mini rally in the indices would most likely be sold into,” said Rajesh Baheti, MD, Crosseas Capital. “After the past three-four months of heavy put writing we’ve moved to a trend where calls are being written aplenty relative to puts, which is negative.”

Indeed, the weekly Bank Nifty (February 8 expiry) put call ratio (PCR) hovers at 0.54, meaning traders have sold only 54 puts for every 100 calls sold. On Monday, fresh call writing was seen from 26000-26500. Puts were also written from 26200-24500, but in smaller quantities than calls.

Chandan Taparia, derivatives analyst at Motilal OswalBSE -2.88 % Securities, said the Bank Nifty was close to the resistance of 25952 which it surpassed recently after weeks to test its fresh high of 27652 on January 29. “Odds are that it would break this support. Buying a put or better still doing a bear put spread would be expedient given that private banks have begun correcting after the fall in PSU banks.”

[“Source-economictimes”]