Markets losing steam as OI falling at OTM strikes

The support level moved up by 500 points to 21,500PE, while the resistance level remained at 23,000CE for the second week, as per the options data on NSE after a special trading session on Saturday (May 18).

The highest Call OI is seen at 23,000CE followed by 22,600/ 24,000/ 22,800/ 23,500/ 22,700/ 22,600 strikes, while 24,000/ 23,400/ 23,000/ 23,200 recorded moderate addition of Call OI. Moreover, marginal OI fall has been recorded select deep OTM and ITM Call strikes.

Maximum Put OI is visible at 21,500PE followed by 22,400/ 22,000/ 22,300/ 22,000/ 21,950/ 21,700/ 21,800/ 21,300/ 21,400 strikes. Further, 22,500/21,500/21,700/22,400 strikes witnessed marginal build-up of Put OI. Select deep Put OTM recorded a modest fall in OI.

Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “In the derivatives market, Nifty options showed the highest Call Open Interest at the 23,000 and 22,500 strikes, while the highest Put Open Interest was observed at the 22,000 and 22,400 strikes. For the Bank Nifty, the highest Call Open Interest was at the 48,500 strike, with the highest Put Open Interest at the 48,500 strikes.”

Aggressive Call writing was visible owing to profit booking last Friday. A directional move in Nifty is expected if a round of covering takes place. Despite the low Put OI base, there may not be much decline. Buying opportunity is considered with major support placed near 22,200 level.

“Throughout the past week, both domestic indices experienced significant volatility, ultimately closing on a positive note. The Bank Nifty trailed behind the Nifty, recording a gain of about 1.5 per cent, while Nifty itself saw an increase of over 1.75 per cent. Notable gains were witnessed in realty, metal and PSE stocks, whereas FMCG and IT stocks demonstrated slower growth,” added Bisht.

BSE Sensex closed the week ended May 18, 2024, at 74,005.94 points, a net gain of 1,341.47 points or 1.84 per cent, from the previous week’s (May 10) closing of 72,664.47 points. For the week, NSE Nifty also moved up by 446.80 points or 2.02 per cent to 22,502 points from 22,055.20 points a week ago.

Bisht forecasts: “Looking ahead, we anticipate the recovery in Indian markets to persist, with the Nifty encountering immediate resistance in the 22,500-22,600 zone and strong support in the 22,300-22,200 zone.”

Leverage positions in the futures rose marginally last week amid buying seen from FIIs. The net shorts of 25,000 in index futures turned to net longs of 33,000 last week as fresh longs seems to be formed in both Nifty and Bank Nifty, observes ICICIdirect.com.

It’s unlikely that any major fall from current levels and only a move below 22,400 may see some liquidation.

“Implied Volatility for Nifty’s Call options settled at 19.21 per cent, while Put options concluded at 20.15 per cent. The India VIX, a key market volatility indicator, closed the week at 20 per cent. The Put-Call Ratio of Open Interest stood at 1.11 for the week,” remarked Bisht.

India VIX rose 2.65 per cent to 20.52 level on Saturday.

Bank Nifty

NSE’s banking index closed the week at 48,199.50 points, higher by 778.40 points or 1.64 per cent from the previous week’s closing of 47,421.10 points.