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So Nifty’s 5050 is here. Any dollar investment at the beginning of this year in our markets has given super normal returns in less than a month’s time. FIIs have certainly done it and continue to do so. Last week, too, we saw them pouring around Rs3,500 crore in the cash market segment and another Rs2,000 crore of net index long positions being formed.

Call option writers are running to cover their positions, and we have seen significant unwinding on a weekly basis in calls from 4800 to 5000 strikes. And 5100, which still has maximum open interest (OI) in calls on weekly basis, has added some OI. But, in the last two trading sessions, it has started witnessing unwinding. Put writers are now becoming very aggressive and have written 4900 and 5000 puts in a big way. Some of them have also started writing 5100 put. This has resulted in a sharp rise in the put call ratio of open interest from 1.26 to 1.60 levels in a week’s time.

Nifty has added huge open interest in the last few days, especially from foreigners’ side. Rollovers are strong around 43%. Interestingly, Banknifty is showing less rollover in comparison to Nifty, around 31%, clearly indicating that short traders are moving out of the sector after the strong run-up witnessed recently.

And yes, the liquidity parameter of US and German bond yields has also worked in the favourable scenario. The dollar index is depreciating, rupee is appreciating. Also, weaker hands are still holding substantial short positions and have been fighting against the trend. In short, from both statistical and derivatives data perspective, it’s a picture-perfect scenario for the market to continue its upward movement.

We mentioned last week that the next resistance will be around 5050-5100, and hence asked you to continue to hold on to long positions. We are there. Despite all the above favourable factors, we would like to hold to our opinion last week and respect this resistance zone the market has reached in the last one week.

Honestly, barring Reliance and ITC’s disappointing numbers, there is no compelling reason for us to suggest that it’s time to book profit in some of the long positions. We are not even hinting to short this market. The call for profit-booking is on the premise that when things turn too good, which is the case from derivatives research perspective, one should always know that they can be too good to be true. It’s not a bull market, and for many reasons, we may see lower levels going long again.

— The writer is head — equity derivatives, Angel Broking