Thursday, May 2, 2013

Nifty Open Interest Clue !!!

Date: 02-May-2013

Nifty open interest dashboard suggests that the market may soon see some correction as it nears 6000-6150 mark and this correction may take Nifty down upto 5700-5750 levels.

The reduction in open interest of deep-in-the-money calls of 5700 strike is seen as long traders unwinding their positions similarly we can see that Out-of-the-money 6200 calls are being sold aggressively in anticipation of correction as we get near to 6200 mark. See the levels marked in Red circle on the image below.

The RBI policy review scheduled on Friday, 3-May-2013.  If RBI cuts the interest rate, as expected, we should start selling Nifty. Stop loss will be 6230. Target will be 5750.

Nifty Open Interest - May Series