Open Interest Analysis

Jayakumar.int

Well-Known Member
#1
In today's session some longs are added to Nifty futures(+0.25%), but this is not a significant addition, so it can be assumed that still some upside left in Nifty(may be till 10420-10470).
For BankNifty fresh longs are added, it can be assumed that BankNifty looks much stronger than Nifty. Upcoming datas like IIP and Inflation can impact its movement and outcome GST meeting too will have an impact. If positive reaction then BankNifty may head towards 25900 lets wait and watch......


OI data attached.....

oi nov09.png
 

Jayakumar.int

Well-Known Member
#2
On Friday's session, Open Interest in Nifty futures was up by +4.1%, its a significant long buildup, it may be due to expectations of better IIP(that came after market hours), but IIP was lower than expected. We have to wait and watch how market reacts on Monday's session. Inflation data's are expected on Monday's and Tuesday's session.

Nifty futures registered its contract(Nov contract) low of 10284, and moreover 21day moving average in Nifty spot remains at 10295, so Nifty has to hold above 10300 levels for upside.

For BankNifty as expected it remained stronger than Nifty and fresh longs are created (OI up by 3.8%), so we are heading for a tough week as market will remain volatile.

Positive factors: Long build up in both Nifty and BankNifty, Nifty stays above 21day moving average, tax cut in GST.

Negative factors: IIP weak, Inflation is expected to rise, rising crude prices.

Both bulls and bears would try to control market, irrespective of negative factors if Nifty moves above 10350 then it can aim for 10470-10500 and BankNifty towards 25900-26000.
 

Jayakumar.int

Well-Known Member
#3
There's one more negative news for markets in the form of Inflation that had jumped to its seven month high of 3.58%, so Nifty may stay with negative bias as long as it remains below 10300 levels.

As per Open Interest it was up by 1.2% for Nifty and 0.25% up for BankNifty it seems bulls have not given up yet. Technically, Nifty has weaken below 10300 and next support would be around 10100-10150.

Based on Open Interest there are two possibilities, Nifty can gradually move towards 10100 and if longs still holds then there may be sharp bounce back, the other possibility if Long position starts wind up once Nifty nears 10100 then we can expect a bigger correction.
 

Jayakumar.int

Well-Known Member
#4
As expected Long position are being wind up Nifty OI -4.6% and BankNifty -2.1%. Based on the Open Interest it seems BankNifty still has strength as Long position is not being wind up as significantly when compared to Nifty.

Nifty futures has made new contract(November contract) low of 10225, while BankNifty's Nov contract low is 24920 yet to be broken. Nifty would continue to be weak below 10300.

Support levels for Nifty futures 10100-10150.
 

Jayakumar.int

Well-Known Member
#5
Long positions continued to be wind up in Nifty(OI -2.5%) and BankNifty(OI -1.5%). Technically, Nifty(spot) closed nearby its 50day moving average of 10120, it has to hold above this level for any bounce back. So far BankNifty has provided some cushion to Nifty from a free fall.

Tomorrow's session is crucial for Nifty as in the recent fall volumes in Nifty futures was average, if volumes increases once Nifty breaks below 10100 then 10000 levels would be tested.
 

Jayakumar.int

Well-Known Member
#6
Nifty bounced from its 50day moving average of 10125 on the last session, as per Open Interest longs are being wind up in both Nifty(OI -3.8%) and Bankifty(-2.2%) in the bounce back.

Technically, Nifty may try to break above its 21day moving average of 10295 in the coming days. Fresh longs can be created if Nifty breaks and holds above 10295. On the down side, support would be 10125.
 

Jayakumar.int

Well-Known Member
#7
Nifty bounced back last week and closed marginally below its 21day moving average of 10300. Nifty futures Open Interest was down by -1% indicating wind up of long position, still there's no fresh position either long or shot had been build up in Nifty.

Technically, Nifty(spot) on a close above 10300 may aim for 10430, on the downside it may once again test its recent lows on any failure to move above 10300, support levels are 10230-10170-10130.

For BankNifty, fresh longs are added as OI was up by +6.2%, if BankNifty holds above 25500 then target for November contract would be 26200.
 

Jayakumar.int

Well-Known Member
#8
Nifty futures open interest was up marginally by 0.29% indicating addition of long position, even though its not a significant addition, any break above 10320 in Nifty(spot) may help bulls to test 10370 and 10430 levels in the coming days.

Open Interest in BankNifty futures was up by 1.03% addition to existing long position that was created on Friday’s session. This may take BankNifty futures towards 26200 in the coming days.
 

mohan.sic

Well-Known Member
#9
Nifty futures open interest was up marginally by 0.29% indicating addition of long position, even though its not a significant addition, any break above 10320 in Nifty(spot) may help bulls to test 10370 and 10430 levels in the coming days.

Open Interest in BankNifty futures was up by 1.03% addition to existing long position that was created on Friday’s session. This may take BankNifty futures towards 26200 in the coming days.

dear, I see you repeatedly say long buildup.
what is long buildup ?
Yes, any increase in OI numbers is a build up. But why you call it long build up.

If you take a fresh long position, its a long build up for you. But at the same time, it would be a short build up for your seller. So is it correct using this word Long build up from market perspective ?

kindly clarify.
 
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Jayakumar.int

Well-Known Member
#10
Dear Sir,

Futures are traded by both speculators(one sided naked position - for short term) and Hedgers(those who have underlying position in Equity - they plan for longer period ), as you have rightly mentioned that for buyer its a long build up and for seller its short build up.

In this senario, we have to take the trend in underlying, if Nifty goes up and OI rises, it can be taken as long position are added as speculators would buy, while hedgers will sell.

So how the open Interest position are increased or decreased, assume that from current levels market is expected to move up or down (that may be due to some expected news or based on technicals) then more people will speculate and hedge, here we have to see in percentage terms how much OI is up or down.

By regularly tracking you can judge how much bullish or bearish the trend is, take the case of BankNifty last week on Friday OI was up by +6.2% along with uptrend(moreover it dint fell along with Nifty previously) so it can be assumed that Fresh longs are added.
 

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