Moderate fall in OI at Deep Put ITM strikes

The resistance and support levels declined by 300 points each to 22,700CE and 22,300PE respectively and trade range is expected to be limited with downside bias. The 22,700CE has highest Call OI followed by 23,000/ 22,800/ 23,500/ 23,200/ 22,600/ 22,650/ 22,900/ 23,300/ 23,150strikes, while 22,700/ 22,600/ 22,650/ 23,000/ 23,500 recorded hefty build-up of Call OI.

Coming to the Put side, maximum Put OI is seen at 22,200PE followed by 22,500/ 22,600/ 21,800/21,500/ 21,800/ 22,000/ 22,600/ 22,700 strikes. Further, 22,200/ 22,000/ 22,600 strikes witnessed reasonable addition of Put OI. Deep Put ITM strikes recorded moderate fall in OI.

Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “From the derivatives front, Nifty options showed the highest Call Open Interest at the 22,800 and 22,600 strikes, while the highest Put Open Interest was noted at the 22,200 strike.”

The leverage positions in the Nifty futures remained low as no major build-up was seen in the April series. Even FII net shorts rose marginally as the premium also declined during the week. Thus, in case of sustainability at current levels extension of the up move towards 22,800 can’t be ruled out.

Nifty weekly settlement expiry was on Wednesday due to trading holiday on Thursday. Considering options OI bases on both sides of the options chain, it’s predicted that major movement in either direction seems unlikely. However, the Put writing seems higher when compared to the Call strikes for this week. Hence, decline towards 22,300 remains a buying opportunity in the shortened week.

“In the week gone by, both Nifty and Bank Nifty reached their record highs. However, on the back of profit booking, both the indices pared most of its gains and ended on a flat note. Among sectors, notable gains were seen in metals, real estate and oil & gas, while underperformance was observed in pharmaceuticals, PSU banks and media stocks,” remarked Bisht.

BSE Sensex closed the week ended April 12, 2024, at 74,244.90 points, a minute fall of 3.3 points or 0.0044 per cent, from the previous week’s (April 5) closing of 74,248.22 points. For the week, NSE Nifty also edged down by 5.7 points or 0.0253 per cent to 22,519.40 points from 22,513.70 points a week ago.

Bisht forecasts: “For the upcoming week, we expect markets to remain volatile ahead of corporate earnings. On the downside, Nifty holds a strong support in the zone of 22,300-22,200, while on the higher side, the 22,700-22,800 range would act as a strong hurdle for the index. Bias is likely to remain in favour of bulls, so any dip should be used to create fresh longs.”

India VIX rose 3.83 per cent to 11.53 level. The volatility index witnessed its lowest closing in more than four months as the headline index remained significantly range bound ahead of the start of the result season. Stock-specific trading is more likely. A round of uptick in the volatility index can’t be ruled out.

“Implied Volatility for Nifty’s Call options settled at 10.67 per cent and Put options concluded at 11.38 per cent. The India VIX, a crucial market volatility indicator, ended the week at 11.11 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.34 for the week,” said Bisht.

Bank Nifty

NSE’s banking index closed the week at 48,564.55 points, higher by 71.50 points or 0.14 per cent from the previous week’s closing of 48,493.05 points. “For Bank Nifty, the highest Call Open Interest was at the 49,000 strike, followed by the 49,500 strike, while the highest Put Open Interest was observed at the 48,500 and 48,000 strikes,” observed Bisht.