Options data holds restricted trading
Put writers turn aggressive; Nifty’s rollover to Oct series at 76% versus 77.97% in previous month and 3-mth average of 79.33%; The OI fall, price closing in upwards indicate some short covering in Nifty; However, shorts not carried forward; Hence, marginal upside moment likely for Nifty
image for illustrative purpose
The latest options data on NSE after the last Friday session indicate that resistance level remained at 19,800CE for a second consecutive week, while the support level moved up by 800 points to 19,800PE. The Open Interest (OI) bases are indicating narrow-range trading for the week ahead.
The 19,800 strike has highest Call OI followed by 19,700/ 20,000/ 20,250/ 20,500/ 29,850/ 20,100/ 20,300/ 19,650 strikes, while 19,800/ 20,200/ 20,250/ 20,100/ 19,750 strikes recorded modest reasonable build-up of Call OI. Coming to the Put side, maximum Put OI is seen at 19,600/ 19,500/ 19,400/ 19,000/ 18,800/ 19,200 strikes witnessed heavy addition of Put OI. Further, 19,600/ 19,550/ 19,400/ 19,350 strikes added moderate Put OI.
Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “Derivatives data for Nifty showed that Put writing was observed at the 19,600 and 19,500 strikes, with the highest Put Open Interest recorded at the 19,600 strike. Conversely, Call writers seemed active in Nifty, with the highest Open Interest at the 19,800 strike followed by the 19,700 strike.”
“On the weekly chart, both Nifty and Bank Nifty indices ended with minimal change. Infrastructure stocks showed increased buying interest last week, followed by metal stocks. Conversely, there was a trend of profit-taking in IT and media stocks,” added Bisht.
BSE Sensex closed the week ended September 29, 2023, at 65,828.41points, a modest fall of 180.74 points or 0.27 per cent, from the previous week’s (September 22) closing of 66,009.15 points. During the week, NSE Nifty too edged lower by 35.95 points or 0.08 per cent to 19,638.30 points from 19,674.25 points a week ago.
Bisht forecasts: “In the upcoming week, it is expected that Nifty’s trading range will hover between 19,400 and 19,800 levels. Traders are advised to keep a vigilant eye on the India VIX, particularly if it begins to rebound from the support level. The strategy of Sell on rise is recommended as long as Nifty trades below the 19,800 mark.”
The 19,800 strike has highest Call OI followed by 19,700/ 20,000/ 20,250/ 20,500/ 29,850/ 20,100/ 20,300/ 19,650 strikes, while 19,800/ 20,200/ 20,250/ 20,100/ 19,750 strikes recorded modest reasonable build-up of Call OI. Coming to the Put side, maximum Put OI is seen at 19,600/ 19,500/ 19,400/ 19,000/ 18,800/ 19,200 strikes witnessed heavy addition of Put OI. Further, 19,600/ 19,550/ 19,400/ 19,350 strikes added moderate Put OI.
Nifty closed the September series with 1.1 per cent higher, while Bank Nifty marginally moved up by 0.71 per cent to 43,989 points. Nifty’s rollover to October series at 76.00% versus 77.97% in previous month and three-month average of 79.33 per cent. The rollover cost was 113.55 points. The fall in OI, price closing in upwards indicate some short covering in Nifty. However, shorts were not carried forward. Hence, marginal upside moment likely for Nifty.
“Currently, the Nifty’s rollover rate shows a marginal decrease as compared to the preceding month. In the prior month, the rollover rate stood at 78 per cent, whereas in the current month, it has slightly dipped to 76 per cent. On the flip side, Bank Nifty boasts a rollover rate of 85 per cent, surpassing the average rollover rate of the last three months. The rollover rates suggest a similar momentum trend as the previous Nifty expiration. Expect Bank Nifty to demonstrate outperformance as compared to Nifty in the October series,” remarked Bisht.
Nifty Futures began the October series with OI of 1.04 crore shares as against 1.06 crore shares OI in the previous rollover.
“Implied Volatility for Call options in Nifty settled at 11.85 per cent, whereas Put options concluded at 12.38 per cent. The India VIX, an indicator of market volatility, ended the week at 12.82 per cent. The Put-Call Ratio of Open Interest, which stood at 1.46 for the week, suggested a greater inclination towards Put writing over Calls,” observes Bisht.
Bank Nifty
NSE’s banking index closed the week at 44,584.55 points, miniscule lower by 27.50 points or 0.06 per cent from the previous week’s closing of 44,612.05 points.” In Bank Nifty, the highest Call Open Interest was seen at the 45,000 strike, while on the Put side, it was noted at the 44,500 strike,” said Bisht.
