It was not a happy outing for bulls on the indices as both of them witnessed some profit taking. Worse both finished near their lows. But range is small so I wouldn’t worry much. Promptly, call shorts emerged in the Nifty staring from 25100 while Put additions remained sedate. Similar action is seen in Bank Nifty too but here the solid Put concentration at 56000 stays while call additions happened at 57000. I would ascribe this to the active option trader who swings with the market this way and that and hence doesn’t really denote any change in directional bias. But premium are diluted and hence market is not building in for big moves. Therefore, trends the next two days should turn a bit more sedate and become stock specific and driven by news flows. Hence don’t go in with pre-decided thoughts and approach with an open mind.

What we are seeing in the other areas of the market is some quick sector rotation. IT, Power and a bit of Pharma was at play yesterday, while Financials, Banks witnessed clear profit taking. It is evident that conviction power of long creators is still quite low and hence they are quick to surrender their recently created longs in these sectors. Possibly, operators are playing on that fear psychoses and creating quick moves. If bigger moves have to occur in these sectors ahead – as I expect it will- then operator circle will try their best to unload recent boarders of the trend train. One of the telltale signals is that the Microcap index as well as the small cap index both moved up, indicting that retail participation from the long side continues.

I continue to hold my long Bank Nifty and SBI long positions. They are down a bit but still comfortably above my entry so I have no difficulty in holding long. For those that chased higher, it may be more difficult. No solutions for them but to state that have faith in the uptrend for now.