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Derivatives Positions

 Desks of brokers -homegrown players who act as counterparties to FIIs -may hint at where they think markets could be headed in the near term. Their current outstanding positions indicate a cautious outlook on the Nifty. Instead they have been focusing more on individual stocks.

1. What do the index outstanding positions of clients and proprietary indicate?


A rather cautious outlook on the market with bullishness probably in respect of certain stocks. While it's possi stocks. While it's possi ble that markets won't rally much from current levels, steep falls, too, might not be expected.

Here's why .Clients, a few days ago, were net short index futures to the tune of 93712 con tracts. Proprietary was net short index futures, namely Nifty and Bank Nifty, at 40981 contracts.

Both these categories have chosen instead to engage in stock picking. HNIs (high net worth in dividuals) are net long stock futures at 411,118 contracts. The figure for proprietary is 35403.

However, these posi tions could possibly be hedges to sale of cash stocks, which is why we used the term probably with respect to bullish ness in certain stock counters. Then again, clients were net short index call op tions at 126,765 con tracts. The pro figure was at 36982.

2. Who are the counterparties to client and proprietary?


DIIs (domestic institutional in vestors), comprising mutual funds, insurance companies and FIIs (foreign institutional investors). FIIs (foreign institutional investors).

3. What is their stance in the derivatives market?


Their stance contrasts some what with that of their home grown rivals. They are net long index futures. However, FIIs net pur index futures. However, FIIs net purchase of 205369 index puts shows they are bracing for risk in the event of growing global uncertainty over Brexit and its fallout on EU.

4. Basis the derivative stance of proprietary and client what's the prognosis for markets this month?


On Friday at closing, proprie tary and client who've sold in dex options to FIIs and DIIs see markets trading in 8140-8540 band.That's because maximum sales of Nifty puts are at 8200 based on outstanding positions and maximum sales of calls are 8500. So they feel upside for markets in the near term should not be much in excess of 2.6%, while downside seems to be capped at 2.2%.

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