Options data holds undercurrent bullish bias

F&O At A Glance

• Highest Call OI at 23,000CE
• Maximum Put OI at 21,000PE
• India VIX rose 1.68% to 14.70 level

The widening gap between resistance and support levels is pointing to broad-based trading this week as the support level declined by 300points to 21,000PE and the resistance level marginally rose 50 points to 23,000CE, according to the latest data available on NSE after last Friday’s session.

The 23,000CE has the highest Call OI followed by 22,800/22,500/ 22,300/ 22,400/ 23,800/ 23,500 strikes, while 22,100/ 22,200/ 22,800 strikes recorded reasonable addition of Call OI. ITM Call strikes witnessed a moderate fall in OI. Coming to the Put side, the maximum Put OI is seen at 21,000PE followed by 21,600/ 21,500/ 20,900/ 20,800/21,100 strikes. Further, 21,600/ 21,900/ 21,500/ 20,900/ 21,100 strikes witnessed moderate build-up of Put OI.

Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “In the Nifty options segment, the highest Call Open Interest is held at 22,200 strike followed by 22,000 strike whereas, on the Put side, the highest Open Interest is at the 21,600 and 21,500 strikes.”

According to data on ICICIdirect.com, FIIs began the February F&O series with high net shorts of more than one lakh contracts in Index futures. Closure of longs during settlement could be the reason for such high net shorts and fresh longs. However, selling pressure is more likely at higher levels. Thus sustainability above 21,700 should be crucial for the continuation of up move. The 21,000 Put strike holds significant OI for this week and is likely to act as immediate support for Nifty. On the higher side, the 21,500 level and OTM strikes are holding noteworthy OI. “Following a surge to another record high post the interim budget, the Indian market experienced a significant profit booking in the later half of Friday’s session and, concluded the week with a gain of over two per cent. In the previous week, major gains were witnessed by PSU banks, Oil& Gas, and energy sectors, while profit-booking activities were noted in the media and FMCG counter.”

BSE Sensex closed the week ended February 2, 2024, at 72,085.63points, a net recovery of 1,384.96 points or 1.95 per cent, from the previous week’s (January 25) closing of 70,700.67 points. During the week, NSE Nifty too gained by 501.20 points or 2.34 per cent at 21,853.80 points from 21,352.60 points a week ago.

Bisht forecasts: “From the technical front, the immediate support for the Nifty lies in the range of 21,600 -21,500 zone, while on the higher side 22,200-22,000 zone would act as an immediate hurdle for the index. We expect the market to trade in the given range with some intraday volatility. Traders are advised to focus on sector and stock-specific moves and use any dipto create fresh longs as the market undertone is still favoring a bullish move ahead.”

India VIX rose 1.68 per cent to the 14.70 level. Considering upcoming events like FOMC and the union budget, it’s likely to remain higher and any dip may be seen post-events only. Moreover, ongoing result season may keep stock-specific volatility on the higher side.

“Implied Volatility for Nifty’s Call options settled at13.57 per cent, while Put options concluded at 14.69 per cent. The India VIX, a key indicator of market volatility, concluded the week at 14.46 per cent. The Put-Call Ratio of Open Interest stood at 1.24 for the week,” observes Bisht.

Bank Nifty

NSE’s banking index closed the week at 45,970.95 points, arise of 1,104.80 points or 2.46 per cent from the previous week’s closing of 44,866.15points.

“For Bank Nifty, the highest Call Open Interest is at the 47,000 strike followed by 46,500, while the highest Put Open Interest is at the 45,000 strike followed by 46,000,” remarked Bisht.