Call writers shifting to higher bands

The support level, which remained at 18,200PE for three weeks, moved up marginally by 100 points to 18,300PE. The resistance level rose by 800 points to 19,000CE and the latest options data on NSE is indicating upward momentum this week in a wide-range trading.

The 19,000CE has highest Call OI followed by 18,700/ 18,800/ 18,500/18,600 19,200/18,900/ 18,750/ 18,400 strikes, while 18,700/18,750/ 19,100/ 18,500/ 18,600/ 18,900/ 19,000 strikes recorded significant build-up of Call OI.

Coming to the Put side, the maximum Put base is seen at 18,300 followed by 18,400/ 18,000/ 18,500/ 18,300/ 17,950/ 17,800 strikes. Further, 18,400/ 18,500/ 18,350/ 18,300/ 17,800/ 18,000 strikes witnessed hefty addition of Put OI.

Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “From the derivatives front, Put writers added hefty Open Interest at 18,400 & 18,300 strikes, while Call writers were seen shifting at higher bands.”

“Some fireworks had been witnessed in Indian markets in the week gone by, as June F&O series began on a positive note with bulls making a strong comeback last week as Nifty tested 18,500 mark, while banking index closed above the key psychological level of 44,000 mark. The sudden up move in Indian markets was supported by gains in heavyweights like RIL, TCS, ICICI Bank & HUL,” added Bisht.

BSE Sensex closed the week ended May 26, 2023, at 62,501.69 points, a rebound of 772.01points or 1.25 per cent, from the previous week’s (May 19) closing of 61,729.68 points. NSE Nifty ended the week at 18,499.35 points, higher by 295.95 points or 0.60 per cent from 18,203.40 points a week ago.

Bisht forecasts: “Technically, both the indices can be seen trading higher and likely to continue their bullish moves in upcoming week as well. For Nifty 18,650-18,700 zone, it would act as an immediate strong hurdle, while 18,300-18,200 zone would provide support in case of any downside. Traders are advised to use any dip for creating fresh longs and keep focus on sectors like IT, FMCG & Reality.”

Nifty rollover to June series was 70.61 per cent as against previous 64.11 per cent and three-month average of 69.06 per cent. Nifty rose 1.83 per cent and added 1.3 crore shares in OI. Bank Nifty was up 1.56 per cent in May series.

“Currently, Nifty rollovers were seen marginally higher as compared to the previous month. In the previous month, the rollover was seen 64.11 per cent, while this month, the rollover is higher than the previous month i,e. 70.61 per cent, which points towards a directional move in June expiry,” observed Bisht.

June series began with Rs2,09,362 crore versus Rs1,95,421 crore in stock futures, Rs24,079 crore versus Rs21,195 crore in Nifty futures, Rs13,44,649 crore versus Rs11,45,782 crore in index options, and Rs218, 010 crore versus, Rs172,056 crore in stock options, according to sharekhan.com.

Nifty premium, which rose to almost 100 points during settlement week, subsided marginally to just 75 points last Friday. However, considering the expected dividend of nearly 60 points in June series, the Nifty premium is significantly high at 130 points, which remains a cause of concern as markets struggled to perform with high premium in the past, according to ICICIdirect.com.

India VIX fell 4.95 per cent to 11.90 level. “Implied volatility (IV) of Calls closed at 10.28 per cent, while that for Put option, it closed at 11.52 per cent. The Nifty VIX for the week closed at 12.52 per cent. PCR of OI for the week closed at 1.48,” remarked Bisht.

The fear gauge declined substantially after hovering around 13 level in the last couple of weeks. Considering the latest aggressive Put writing, intermediate declines may act as buying opportunities in sectors like technology, pharma and consumer durables.

Bank Nifty

NSE’s banking index closed the week at 44,018 points, a further gain of 175.85 points or 1.62 per cent from the previous week’s closing of 43,969.40 points. “In Bank Nifty, the rollovers were seen somewhere almost the same as compared to the last expiry,” said Bisht.