F&O tracker: VIX races to 27-week high before ECB move

By Hemant Nahata, IIFL
The RBI's surprise rate cut caught most traders unawares, leading to a sharp reaction in broader indices on the upside. After remaining choppy in the first half of the previous week, the RBI event led to a strong base formation at 8400 levels.

Since then, the market movement has been on the positive side despite weak global cues. Banking stocks, along with construction and cement, have been the pil lars of the current rally.

Post January 14, FIIs have added some 1.5 lakh contracts on the long side in index futures, translating into a 36% jump in their total long index holding. Their long-short ratio on index futures has moved higher from 5.3x (previous week) to 6.0x as on Friday. On the options front, FII activity remains muted. However, FIIs were net buyers in the cash segment to the tune of Rs 2,800cr over the past two trading sessions.

The previous week saw the range of Nifty options shifting from 8000 put-8500 call to 8300 put-8700 call. The current open interest put call ratio (OI PCR) stands at around 1.26x as traders who were caught on the wrong foot sold puts to cover some part of their outflow. The VIX has closed at 27-week high in anticipation of volatile moves ahead of ECB announcement of bond buying.

Ambuja Cement, UltraTech Cement and Axis have seen fresh addition. With stocks like Ambuja and UltraTech hitting an all-time high, the rally can continue in the current week, too.