Institutional Traders Locked Horns
India’s benchmark Nifty witnessed one of the most intelligent battles between the institutional traders in today’s session in the last hour. The Big sellers snuffed out the buyers from the system and the index tanked 148 points in 45 minutes and registered a low of 11153 approx. Till Friday, institutional sellers had successfully pushed Nifty down to 11283 but were intercepted by big institutional buyers who had been providing support to the index since March 11th. In today’s session, sellers took control of Nifty once the index cracked below 11260 approx. It is important to note that Nifty has plunged close to 550 points since the gamma-vega covariance factor of the Put options neutralized around 11690 on May 7th.
Can The Market Bounce Back?
Today’s closing of Nifty at 11185 approx and India Vix at 27 is indicating that sellers have taken control of Nifty. In case of a bounce back, tomorrow’s range high will be used by the institutional sellers to create short positions again. Today’s closing of India Vix at 27 will play a significant role in deciding the market direction as it will influence the Put options gamma when the market opens tomorrow. Only one equation can change the market trend from here, “If Institutional Buyers Enter The Market And Overpower The Sellers Tomorrow”.
How To Use The Bounce Back To Create Shorts In Bank Nifty
Bank Nifty had created a perfect window to create short positions on a bounce back on the 10th of May. The 3D Delta system indicated, that institutional traders would use the neutral zone for the Put to sell on the rise on the 10th. The index opened around 28983 on the 10th and 3D system waited intelligently for a bounce back. Bank Nifty recovered more than 250 points in the course of the day. The institutional sellers entered the shorts on the 10th around 29245 approx. The far OTM 28300 Put for the 16th May contract was bought @ 50 when Bank Nifty hit 29230 and was carried overnight as the market had titled towards the sell side. Bank Nifty opened with a minor gap down at 29029 today, which caused the implied volatility to fall short of the expected range as the Put strike was far OTM. The position was squared off @ 83 approx.
Bank Nifty Options Data