Options data holds broad-range trading

Registering the weakening steam in the market momentum, the resistance level fell by 400 points to 19,800CE, while the support level declined drastically by 1,100 points to 19,000PE. The 19,800CE has highest Call OI followed by 19,900/ 19,700/ 20,300/ 20,200/ 20,000/ 19,700 strikes, while 19,800/ 19,700/ 20,050/ 20,000/ 20,500/ 20,600 strikes recorded reasonable addition of Call OI.

Coming to the Put side, the maximum Put OI is seen at 19,000PE followed by 19,700/ 19,600/ 19,800/ 19,400/ 19,550/ 19,300/ 19,200/ 18,800/ 18,900 strikes. Further, 19,000/ 19,650/19,600/ 19,300/ 19,150 strikes witnessed moderate build-up of Put OI.

Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “When delving into the derivatives data for Nifty, the most substantial Call writing activity was observed at the 19,800 and 20,000 strike levels. Conversely, the highest Open Interest for Put options was concentrated at the 19,000 strike level followed by 19,700 strike.”

As per data from ICICIdirect.com, FIIs increased their longs in index futures as their net longs rose to 60,000 contracts. This is suggesting ongoing positive bias. Due to change in expiry schedule, Open Interest increased significantly in index options. However, considering ongoing trend and noteworthy option writing at ATM Put strikes, Nifty may remain positive till it is holding above 20,000 level.

“Nifty experienced a decline of over two per cent, whereas Bank Nifty fell by more than three per cent, demonstrating significant underperformance. Profit booking was evident throughout the market, with notable losers are the financial services, metal and pharmaceutical sectors last week,” added Bisht.

BSE Sensex closed the week ended September 22, 2023, at 66,009.15 points, a further recovery of 1,829.21 points or 2.69 per cent, from the previous week’s (September 15) closing of 67,838.63 points. During the week, NSE Nifty too moved up by 518.10 points or 2.56 per cent to 19,674.25 points from 20,192.35 points a week ago.

Bisht forecasts: “Looking ahead to the upcoming week, it is anticipated that Nifty’s trading range will be confined within the levels of 19,800 and 19,400 strikes. The prevailing sentiment suggests considering a sell on rise strategy, provided Nifty trade remains below the 19,800 level.”

India VIX fell 1.46 per cent to 10.66 level. “In terms of Implied Volatility (IV), Call options for Nifty settled at 9.72 per cent, while Put options concluded at 10.63 per cent. The Nifty VIX, which serves as a gauge of market volatility, closed the week at 10.82 per cent. The Put-Call Ratio Open Interest (PCR OI) stood at 0.87 for the week,” observes Bisht.

According to ICICIdirect.com, FIIs continued to cover shorts during the last week and their net longs in the index futures rose to 62,000 contracts from 26,000 contracts seen the previous week. FIIs bought index futures worth Rs3,257 crore. Major chunk of short covering was in the stock futures segment where shorts declined considerably from 1.6 lakh contracts to just 20,000 contracts. Also, they remain active in the Index options space where FIIs have sold contracts worth over Rs40,000 crore.

Bank Nifty

NSE’s banking index closed the week at 44,612.05 points, higher by 1,619.45 points or 3.50 per cent from the previous week’s closing of 46,231.50 points. “Turning our focus to Bank Nifty, the 45,000 strike exhibited the highest Call Open Interest, closely followed by the 45,200 strike. On the Put side, the 44,500 strike held the highest Open Interest, followed by 44,000 strike,” remarked Bisht. The OI base in Bank Nifty at ATM 46,000 Put and 46,500 Call strikes. Due to sharp moves seen in the last few sessions, Call writers seem to be stuck in Bank Nifty. Most of the banking heavyweights are trading near their highest Call base. Banking stocks are expected to play a main role in keeping up the market momentum.