Indian equity markets retreated on low volumes and relatively less participation from domestic and foreign investors on Monday. The Nifty 50 Index declined 1.1 percent and its December futures saw long positions unwind as its open interest fell by 3.8 percent.
The Nifty Bank Index also declined 1.6 percent but there was less than 0.7 percent increase in its December open interest. Foreign institutional investors’ activity also remained subdued with net buying of only Rs 61 crore in index futures.
Index option premiums expanded owing to the drop in major indices as participants geared up for the Federal Reserve decision on interest rates this week.
This led to a surge in the India Volatility Index (VIX) by 7.5 percent to close at 16.19. More writing was seen in the Nifty December 8,300 and 8,200 Calls. Maximum open interest remained with the 8,300 call and the 8,000 put, which indicated the near-term range for index. FII activity once again remained low in index options.