Heavy OI build-up signals strengthening support level

The resistance level remained at 24,000CE for a second consecutive week, while the support level intact at 22,000PE for three weeks in a row, according to the latest options data on NSE. The 24,000CE has highest Call OI followed by 26,500/ 24,200/ 24,500/ 24,200/ 23,900/ 23,800/ 25,000/ 26,000, while 24,000/ 23,300/ 23,400/ 23,500/ 24,200/ 23,900 strikes witnessed heavy build-up of Call OI. Select ITM/OTM strikes recorded marginal Call OI fall.

Coming to the Put side, maximum Put OI is seen at 22,000PE followed by 22,100/ 22,200/ 22,500/ 22,400/ 22,500/ 22,600/ 21,900/ 22,600/ 22,800. Further, 21,250/ 21,300/ 22,000/ 22,400/ 22,800 hold reasonable addition of Put OI. Moderate fall in Put OI is visible at few ITM/OTM strikes.

Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “In the derivatives market, prominent Call Open Interest for Nifty seen at the 23,500 and 23,200 strikes, while the notable Put Open Interest was at the 23,000 strike.”

Major Call writing was at ATM at 24,000 strike. At the same time, higher Put concentration is also visible at 22,000. Hence, sustainability at this level may induce a short covering move in the broader markets. A major trend reversal should be considered only if Nifty moves above 23,800 level.

“Nifty and Bank Nifty ended flat, but in the red. The market saw selling across sectors, whereas IT and FMCG emerging as major gainers on the weekly charts. Meanwhile, realty and energy stocks faced selling pressure,” added Bisht.

For the week ended January 24, 2025, BSE Sensex closed at 76,190.46, a fall of 428.87 points or 0.55 per cent, from the previous week’s (January 17) closing of 76,619.33 points. NSE Nifty too dropped 111 points or 0.47 per cent to 23,092.20 points from 23,203.20 points a week ago.

Bisht forecasts: “Technically Nifty and Bank Nifty both are trading below their 200EMA indicating a weak trend. Any upward movement can be seen as an opportunity to sell on the rise. Nifty’s support is placed around 22,800 and 22,700, with resistance near 23,500.”

India VIX rose marginally 0.30 per cent to 16.74 level. “Implied Volatility for Nifty’s Call options settled at 16.29 per cent, while Put options conclude at 17.07 per cent. The India VIX, a key market volatility indicator, closed the week at 16.70 per cent. The Put-Call Ratio Open Interest (PCR OI) for the week was 0.87,” observed Bisht.

Short additions continued in Nifty futures as recoveries remained limited. Nifty futures premium also remained under pressure throughout the week. Net short positions by FIIs also rose on a weekly basis and moved to 3.2 lakh contracts in Index futures. Another round of short covering is possible if Nifty sustains above 23,000 level this week.

Bank Nifty

NSE’s banking index closed the week at 48,367.80 points, lower by 172.80 or 0.35 per cent from the previous week’s closing of 48,540.60 points. “For Bank Nifty, the prominent Call Open Interest was seen at the 49,000 strikes, whereas notable Put Open Interest at the 48,000 and 47,500 strikes,” remarked Bisht.