Heavy OI Build-Up Denotes Rising Steam In The Mkt

FII net shorts declined owing to rollover and short covering during the last week. However, FII net shorts hovering at 1.15 lakh contracts from 1.5 lakh contracts seen during the last week

The 26,200CE has highest Call OI followed by 26,000/ 26,450/ 25,500/25,000/ 24,700/ 26,300/ 26,400 /26,800 strikes, while 26,450/ 26,400/ 26,300/ 26,000/ 26,200/ 25,100/ 24,700 strikes recorded robust build-up of Call OI. Modest OI fall is seen at a few ITM call strikes.

Coming to the Put side, maximum Put OI is at 21,600PE followed by 23,000/ 22,500/22,700/23,200/ 23,500/ 24,000/ 24,300/ 24,400/ 24,500/ 24,700 strikes. Further, 22,500/ 23,000/ 21,600/ 22,000/ 23,500/ 24,200/ 24,700 strikes witnessed reasonable to heavy addition of Put OI. Only OTM strike 22,900PE recorded fall in Put OI.

Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “In the derivatives market, Nifty holds highest Open Interest at 25,000 strike in Calls, while on downside Open Interest seen adding at 24,500 & 24,200 Put strikes.”

Despite Friday’s marginal fall, heavy Call writing persisted at the 26,000 ATM strike. However, aggressive Put writing was also observed at 21,600PE. Analysts predict that Nifty may sustain its current levels and a short-covering rally toward 24,500 can’t be ruled out. If Nifty breaches the 23,900 level again, then it may result in a fresh bout of weakness.

“Indian markets witnessed a fresh round of buying last week as Nifty and Bank Nifty, both ended the week on a positive note with gains of more than two per cent each. Sectors like Auto, Metal, Reality along with Financial services shine last week, while subdued movement was observed in pharma & FMCG counters,” added Bisht.

BSE Sensex closed the week ended December 6, 2024, at 81,709.12 points, a further recovery of 1,906.33 points or 2.38 per cent, from the previous week’s (Nov 29) closing of 79,802.79 points. For the week, NSE Nifty also climbed 546.7 points or 2.26 per cent to 24,677.80 points from 24,131.10 points a week ago.

Bisht forecasts: “Technically, Nifty is holding well above its key psychological level of 24,500 as index has witnessed a fresh breakout above the Inverted Head & Shoulder pattern on daily time frame. Technically both the indices are expected to witness follow up buying in upcoming week with some intraday volatility on cards. The immediate support for Nifty is placed at 24,500 levels, while on higher side, a decisive move above 24,800 levels could trigger fresh round of buying which can take Nifty towards 25,000 levels as well.”

Nifty OI in futures rose marginally in ongoing December series to over 1.17 crore shares. This suggests a moderate build-up of short positions. A breakout beyond 24,500 could trigger fresh direction on the upside, potentially driving the index toward the 25000 level in subsequent sessions, according to ICICIdirect.com.

India VIX fell 2.67 per cent to 14.14 level. “The Implied Volatility on Nifty Call options was 13.37 per cent and on Put options was 14.09 per cent. India VIX, ended the week at 14.53 per cent. The Put-Call of Open Interest Ratio for the week was 1.28,” remarked Bisht.

FII net shorts declined owing to rollover and short covering during the last week. However, FII net shorts hovering at 1.15 lakh contracts from 1.5 lakh contracts seen during the last week. At the same time, retail participants reduced their long exposure in the index and they are net long with 1.8 lakh contracts from nearly 2.4 lakh contracts seen last week, according to the data from ICICIdirect.com.

Bank Nifty

NSE’s banking index closed the week at 53,509.50 points, higher by 1,453.90 points or 2.79 per cent from the previous week’s closing of 52,055.60 points.