Hefty OI Bases In Wide-Range Denotes Higher Volatility

We expect that bears likely to keep control over the markets for next few sessions as we have witnessed immense long unwinding from record highs. Traders should remain vigilant for any long trades, said Dhirender Singh Bisht, AVP (technical research-equity) at SMC Global Securities Ltd

The support level fell by 1,900 points to 23,100PE and the resistance level rose by 950 points to 27,950CE, according to the latest data on NSE after the last Friday session.

The 27,950CE has highest Call OI followed by 27,000/ 27,750/ 27,900/ 26,500/ 26,200/ 26,000/ 25,800/25,500/ 25,200/ 25,000, while 27,950/ 27,750/ 27,850/ 27,000/ 27,500/ 26,500/ 26,400/ 26,000/ 25,500/ 25,000 strikes recorded hefty build-up of Call OI. And no offloading at any Call strike.

Maximum Put OI is seen at 23,100PE followed by 23,500/ 24,000/ 24,100/ 24,200/ 24,500/ 25,000/ 25,200/ 25,500 strikes. Further, 23,100/ 23,500/ 24,000/ 24,200/ 24,800 strikes witnessed reasonable addition of Put OI. Marginal OI fall is visible at ITM strikes from 25,150PE onwards.

Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “In the derivatives market, Nifty highest Call Open Interest is at 25,400 and 25,200 strikes, while for Put side highest Open Interest was observed at the 25,000 and 24,500 strikes.”

Nifty gained four per cent during September F&O series. Nifty began October series with over 1.69- cr OI, highest since Covid.

“The recent changes by Sebi to limit index weekly contracts per exchange and increase lot sizes have certainly shifted market dynamics. With Nifty and Bank Nifty both experiencing corrections of over four per cent on a weekly basis, it seems like traders are adjusting to the new rules. Sentiment-based selling seen as investors react to regulatory changes. There was significant selling in the realty, infrastructure, and auto sectors, while only the metal sector managed to close flat, outperforming the market,” added Bisht.

BSE Sensex closed the week ended October 4, 2024, at 81,688.45 points, a heavy loss of 3,883.4 points or 4.53 per cent, from the previous week’s (September 27) closing of 85,571.85 points. For the week, NSE Nifty also tumbled by 1,164.35 points or 4.44 per cent to 25,014.60 from 26,178.95 points a week ago.

Bisht forecasts: “Technically Nifty has next support at 24,800 points, while on the higher side 25,200-25,400 zone would act as a key resistance zone for the index. We expect that bears are likely to keep control over the markets for next few sessions as we have witnessed immense long unwinding from record highs. Traders should remain vigilant for any long trades.”

India VIX rose 7.27 per cent to 14.13 level.

“Implied Volatility (IV) for Nifty’s Call options settled at 11.91 per cent, while Put options concluded at 12.59 per cent. The India VIX, a key market volatility indicator, closed the week at 13.17 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.03 for the week,” said Bisht.

FII net longs in Index futures were at extreme level with over 3.6 lakh contracts. Retail participants remained cautious and held shorts with 2.5 lakh contracts. FIIs remained extremely long in stock futures with over 9 lakh contracts.

Bank Nifty

NSE’s banking index closed the week at 51,462.05 points, lower by 2,372.25 points or 4.40 per cent from the previous week’s closing of 53,834.30 points.

“For the Bank Nifty, highest Call Open Interest is at 52,500 and 52,000 strikes whereas for Put highest Open Interest is at the 50,500 and 51,000 strikes,” remarked Bisht.