Modest OI fall Call OTM strikes
Put-Call Ratio of OI at 1.13; Increasing India VIX is the primary worry for the market
image for illustrative purpose
The latest options data on NSE after last Friday session indicates an upward movement of support level by 1,000 points to 21,000PE, while the resistance level rose marginally 200 points to 23,000CE.
The 23,000CE has highest Call OI followed by 22,500/ 22,700/ 22,800/ 22,600/ 22,200/ 244,500/ 24,000 strikes, while 22,800/ 22,900/ 22,500/ 22,700/ 22,900 strikes recorded reasonable addition of Call OI. Select OTM strikes witnessed marginal drop in Call OI.
Maximum Put OI is seen at 21,000PE followed by 20,250/ 20,500/ 21,500/ 22,100/ 22,500/ 20,300 strikes. Further, 21,000/ 20,200/ 22,000/ 21,600/ 21,700/ 21,900 strikes witnessed moderate build-up of Put OI. From 22,600PE onwards select ITM strikes recorded minute 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 23,000 and 22,500 strikes, while the highest Put Open Interest was noted at the 22,000 and 21,500 strikes. For Bank Nifty, the highest Call Open Interest was at the 48,000 strike, while the highest Put Open Interest was observed at the 47,500 strikes.”
Due to profit booking, aggressive Call writing was observed across the Call strikes for this week. Significant Open Interest is seen at ATM and OTM Call strikes. However, recovery may find some momentum if Nifty moves beyond 22,600 level once again.
“During the last week, both indices concluded on a negative note, with Bank Nifty underperforming Nifty and recording a loss exceeding three per cent, while Nifty itself experienced a loss of over 1.5 per cent. Profit booking was observed in PSU bank, PSE and media stocks, whereas FMCG and auto stocks emerged as the primary gainers,” added Bisht.
On last Friday, Nifty lost all the gains of the week and closed the week marginally positive despite making fresh life highs during the last week.
BSE Sensex closed the week ended May 10, 2024, at 72,664.47 points, a net fall of 1,213.68 points or 1.64 per cent, from the previous week’s (May 3) closing of 73,878.15 points. For the week, NSE Nifty also moved down by 420.65 points or 1.87 per cent to 22,055.20 points from 22,475.85 points a week ago.
Bisht forecasts: “Traders should closely monitor this indicator because there’s a negative correlation between volatility and the market, indicating limited upside potential in the present circumstances. In upcoming sessions, it’s expected that the Nifty will trade within the range of 21,700 to 22,400 levels.”
The volatility index rose sharply last week and moved to its highest levels seen in more than two months. Ongoing result season along with the Lok Sabha elections triggered the rise in volatility index and it is likely to remain high in the coming weeks. India VIX rose 1.50 per cent to 18.47 level.
“Implied Volatility for Nifty’s Call options settled at 13.97 per cent and Put options concluded at 14.38 per cent. The India VIX, a crucial market volatility indicator, ended the week at 18.20 per cent. The Put-Call Ratio of Open Interest stood at 1.13 for the week. Currently, the increasing India VIX is the primary worry for the market,” remarked Bisht.
Bank Nifty
NSE’s banking index closed the week at 47,421.10 points, higher by 1502.45 points or 3.07 per cent from the previous week’s closing of 48,923.55 points.
