15 May 2025 : Signs That Today’s Nifty Rise Was a Short Covering Rally
Sharp Gap-Up / Quick Upward Move Early in the Day
– Nifty opened strong and kept gaining without much intraday dip.
Massive Jump in Futures Open Interest Alongside Price Increase
Futures OI today saw a +11% jump — but importantly, coupled with a strong rise in price.
When prices rise and shorts are covering, you’ll see OI drops (if unwinding) or increases (if fresh longs jump in post-covering).
Call Writers Unwinding at Key Levels
At strikes like 25,000 CE, large call OI positions started reducing, indicating call writers rushing to cover losing positions.
Put OI Build-Up Shifting Higher
Heavy put writing shifted to 24,900–25,000 levels — a typical pattern in short-covering days as sentiment flips bullish intraday.
PCR Rising
PCR moved up to 1.28, reflecting put writers getting active, and short call writers likely covering.
How to Spot It Live Next Time:
- Look for high OI at call strikes being unwound as prices approach those levels.
- Check for Futures OI either dropping (pure covering) or rising moderately (covering + fresh longs).
- Keep an eye on PCR jumping suddenly from neutral/bearish zones (like 0.8) to 1.2+
- Monitor price action — sharp, relentless intraday up moves with little retracement are often driven by covering.
Today’s rise wasn’t entirely driven by fresh bullish buying — a large part was shorts getting squeezed out at key levels like 24,800 and 25,000, triggering a cascading rally.
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