Modest OI Addition Signals Bearish Bias

FIIs increased net shorts to 2.75 lakh contracts from 2.2 lakh contracts last week. Retail participants also raised long bets in Index futures to 3.2 lakh contracts

The resistance level eased by 500 points to 24,000CE and the support level remained at 22,000PE for a second consecutive week. The modest addition of Open Interest (OI) bases is indicating sideways trading for the week ahead.

The 24,000CE has highest Call OI followed by 23,600/ 23,700/ 23,800/ 24,200/ 25,500/ 25,900/ 25,950 strikes, while 25,950/ 25,000/ 24,500/ 24,400/ 24,100/ 23,200/ 23,500 strikes recorded modest addition of Call OI.

The maximum Put OI is seen at 22,000PE followed by 21,500/ 22,200/ 22,700/ 22,500/23,000 strikes. Further, 21,350/ 21,400/ 21,500/ 21,700/22,000/ 22,200 strikes witnessed marginal build-up of Put OI. However, there is no major fall in OI on either side of the options chain.

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 24,000 and 23,500 strikes, while the notable Put Open Interest was at the 22,700 strike.”

According to ICICIdirect.com, due to continued weakness in the last week, no major Put writing was visible at near the money strikes, while Call concentration is evident across the ATM and OTM strikes. Call OI concentration is much higher than the Puts and despite that noteworthy Call and Put bases are placed at ATM 23,500 strikes. Analysts forecast that limited fall in Nifty towards 23,200 this week and the index may hover in consolidation above this level.

“Nifty experienced a technical bounce after testing its previous swing low, while Bank Nifty showed weakness and continued trading below its prior swing low. On the weekly chart, Nifty declined by around one per cent, while Bank Nifty fell by 0.40 per cent. Among sectorial indices, major gainers were PSU Bank, Metals and Commodities, whereas IT, Consumer Durables, and Realty were the top losers for the week,” added Bisht.

For the week ended January 17, 2025, BSE Sensex closed at 76,619.33, a fall of 759.58 points or 0.98 per cent, from the previous week’s (January 10) closing of 77,378.91 points.

NSE Nifty too dropped 228.3 points or 0.97 per cent to 23,203.20 points from 23,431.50 points a week ago.

Bisht forecasts: “Traders are advised to cloasely monitor the market. Any upward movement can be seen as an opportunity to sell on the rise. Nifty’s support is around 22,800, with resistance near 23,500.”

India VIX rose 1.83 per cent to 15.75 level. India VIX continues in 13-15 range despite sharp sell-off in the last week. If India VIX goes above 16 level, then it’ll be as a signal of caution.

“Implied Volatility for Nifty’s Call options settled at 15.16 per cent, while Put options conclude at 15.97 per cent. The India VIX, a key market volatility indicator, closed the week at 15.47 per cent. The Put-Call Ratio of Open Interest for the week was 1.01,” observed Bisht. Fresh short additions were seen in F&O space as FIIs increased net shorts to 2.75 lakh contracts from net shorts of 2.2 lakh contracts seen last week. Long bets in Index futures from retail participants also rose to 3.2 lakh contracts. Moreover, FIIs were continuously writing the Call strikes suggesting limited upsides expectations.

Bank Nifty

NSE’s banking index closed the week at 48,540.60 points, lower by 193.55 or 0.39 per cent from the previous week’s closing of 48,734.15 points. “For Bank Nifty, the prominent Call OI was seen at the 49,000 strikes, whereas notable Put OI at the 48,000 strike,” remarked Bisht.