Vedanta- Technical Weakness due to High OI

Vedanta share price fell by Rs. 20 in last 2 weeks, shaking even perceived or so called MT & LT investors. Though share price rose one way from 160 in mid Jan to 295 in mid May, but few investors get panicky on a fall of 20, while not enjoying gain of 135. Infact, such a huge rise in last 4 months, made investors greedy and  F&O traders complacent, making them build huge long position in May series.

One time OI (open interet) in May series, was over 16 crore shares. Till yesterday evening, 45% reduction in OI was seen in May, to 9,175 Contracts, to 2.84 cr shares, while June series saw a rise of 34% in OI to 30,435 Contracts, to 9.44 cr shares. Some long liquidation of May series may be seen today, while some get rolled over to June series.

This will make weak hands get flushed out, on expiry of May series today, as generally weak and retail traders, do not roll over loss making OI, on FEAR factor, while they roll over profit making position on GREED factor. This theory is propagated by the hourly experts on business channels, supported by Anchors, for their selfish motive, while weak traders get trapped.

So, money making is not so easy in F&O.

Also, Vedanta has strong fundamentals, which are bound to get captured by the share price, to see it moving back to its old levels, maybe in June series.

This is not a buy or sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.