Options data holds limited upward bias
However, Call writers turn aggressive at 20,000 strike, which is key for upward trajectory
image for illustrative purpose
The latest options data on NSE after last Friday session is pointing to wider resistance level by 400 points to 20,000CE, while the support level marginally up by 100 points to 19,500PE. The 20,000CE has highest Call OI followed by 19,600/ 19,600/ 19,800/ 19,650/ 19,900/ 19,750/ 20,200 strikes, while 19,650/ 19,750/ 19,850/ 20,100 strikes witnessed reasonable addition of Call OI.
Coming to the Put side, maximum Put OI is seen at 19,500 followed by 19,400/ 19,300/ 19,450/ 18,500/ 18,900/ 19,200/ 19,000 strikes. Further, 19,400/ 19,450/ 19,300/ 18,900/ 19,500 strikes recorded moderate to hefty build-up of Put OI.
Call writers were aggressive last Friday with 20,000 Call, which has the highest OI base. Hence, a move above 20,000 should be crucial for continued uptrend in the index. On the downside, Nifty already closed below its Put base of 20,000 points, while IVs have remained under pressure. Hence, a round of consolidation is more likely for Nifty in the range of 19,100-19,500 in the coming week.
Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “As per the derivatives data, the highest Open Interest for Call options in Nifty shifted to 19,600 points from 19,500 strike, whereas for Put options, the highest Open Interest concentration remained at 19,500 strike, with significant Put writing at lower strike prices as well.”
Net longs remain on the higher side and liquidation risk may keep the index under pressure in the next couple of sessions. Moreover, retail participants have been net shorts with their highest net shorts in almost four years. Analysts see retracement towards 19,100 level and it gives a fresh entry opportunity.
“Nifty ended the week at a record high and above the key psychological resistance of 19,500 points. On the flip side, Bank Nifty exhibited a weaker performance and closed nearly unchanged over the week with Nifty registering a gain of over one per cent. From the sectorial front, IT and Metal sectors were the primary gainers during the week, while financial services and consumer durables faced downward pressure,” added Bisht.
BSE Sensex closed the week ended July 14, 2023, at 66,060.90 points, a hefty jump of 780.45 points or 1.19 per cent, from the previous week’s (July 7) closing of 65,280.45 points. During the week, NSE Nifty too moved up by 232.70 points or 0.74 per cent to 19,564.50 points from 19,331.80 points a week ago.
Bisht forecasts: “For the upcoming week, it is expected that the market is likely to remain buoyant and move towards new all-time highs. Traders are advised to keep focus on stock and sector-specific moves as index may remain volatile once again and may witness some choppiness as well.”
Registering highest net longs since December 2022, FII net longs in Nifty futures rose above one lakh contracts. “The Implied Volatility (IV) for Call options concluded at 10.21 per cent, while Put options closed at 11.07 per cent. The Nifty VIX, a measure of market volatility, ended the week at 10.94 per cent. The Put-Call Ratio of Open Interest settled at 1.31 for the week,” said Bisht.
Bank Nifty
NSE’s banking index closed the week at 44,819.30 points, a net fall of 105.70 points or 0.23 per cent from the previous week’s closing of 44,925 points. “Based on Open Interest, the current trading range for Bank Nifty is expected to remain in between 45,000 and 44,500 zone,” remarked Bisht.
