Why Markets are not falling?

Analysing the table, FIIs have made contradicting positions in comparison to the Retail client in all the three mentioned aspects i.e. Index Futures, Call Options and Put Options. This has led to a whopping ~4% rally in Nifty since the start of October series

Oct 17, 2017 07:10 IST others Jayesh Bhanushali |

FII v/s Retail Clients: Trading Activity in October F&O expiry
Since the start of the October expiry, stronger hands i.e. FIIs have continuously been adding long speculative positions in the derivative market. If we analyse their trades, they have continuously rolled ~116% of their long positions in index futures and ~108.5% of their short positions in index put options. This indicates their bullish stance on the market. 
Tracking the Long/Short ratio i.e Number of long position in comparison to the short positions, the stronger hands i.e. FIIs index future Long/Short ratio since the start of the October series stands at 1.4x while in the same time frame, the weaker hands i.e. Retail Clients index future Long/Short ratio stands at 0.9x, as clearly seen from the below table.

Long/Short Ratio

FII

Retail Clients

L/S Future

1.38

0.88

L/S CE Options

1.37

0.90

L/S PE Option

0.65

1.54

Analysing the table, FIIs have made contradicting positions in comparison to the Retail client in all the three mentioned aspects i.e. Index Futures, Call Options and Put Options. This has led to a whopping ~4% rally in Nifty since the start of October series.

 
FII-Retail Long/Short Ratio


From the above illustrations, it is clearly visible that the weaker hands have been overshadowed by the FIIs. 
When should you be worried?
The day FIIs long/short ratio stands below 1x on a continual basis which can be indicated as their bearish stance on the market, which could lead to a possible trend reversal.

Related Story