Options data holds undercurrent bullish bias

The 23,500CE has highest Call OI followed by 23,000/ 22,600/ 22,900/ 23,200/ 23,100/ 23,400/ 22,850/ 23,100, while 23,000/ 23,200/ 23,500/ 23,200/ 23,300/ 22,700/ 22,800/ 22,550 strikes recorded hefty build-up of Call OI. OI addition is seen on all Call strikes.

Coming to the Put side, maximum Put OI is seen at 21,500PE followed by 22,000/ 21,800/ 21,000/ 21,900/ 21,200/ 21,650/ 22,100 strikes. Further, 21,800/ 22,000/ 22,100/ 22,200 strikes witnessed reasonable addition of Put OI.

Fall in Put OI visible at deep OTM strikes from 21,500PE and ITM range of 22,500-22,750.

Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “Analysing Nifty’s derivatives data, highest Call writing is seen at the 22,500 and 22,600 strikes. Conversely, Put writers displayed activity, particularly at the 22,500 and 22,000 strikes. In Bank Nifty, the highest Call Open Interest was observed at the 48,500 and 49,000 strikes, while on the Put side, it was concentrated at the 48,000 and 47,000 strikes.”

The Friday recovery indicated an aggressive Put writing at 21,800 strike, which holds the highest OI base for the monthly settlement. Hence, Nifty may hold itself above this level and is likely to go higher to its VWAP levels. It’s better to avoid longs if the index moves below 22,000 level.

“Nifty and Bank Nifty are currently consolidating near their record highs, with both indices registering weekly gains of over one per cent. Last week, PSU banks, real estate and small-cap stocks stood out as top performers, while IT, financial services, and private banks were laggards,” added Bisht.

BSE Sensex closed the week ended April 26, 2024, at 73,730.16 points, a net gain of 641.83 points or 0.87 per cent, from the previous week’s (April 19) closing of 73,088.33 points. For the week, NSE Nifty also moved up by 272.95 points or 1.23 per cent to 22,419.95 points from 22,147 points a week ago.

Bisht forecasts: “Consequently, we anticipate sluggish movements in both indices until a trigger emerges. The market trend will be determined by how positions are formed throughout the month. In the upcoming week, Nifty may test upside resistance at 22,600pts, whereas downside support is placed at 22,200 points.”

The volatility index India VIX moved up by 16 per cent last week to 10.93 level. Volatility is expected to ease. Ongoing fourth quarter results from heavyweights may keep volatility higher.

“Implied Volatility for Nifty’s Call options settled at 11.60 per cent, while Put options concluded at 12.29 per cent. The India VIX, a key indicator of market volatility, concluded the week at 10.73 per cent. The Put-Call Ratio of Open Interest stood at 1.37 for the week,” remarked Bisht.

“The rollover rate for Bank Nifty in the May series shows a decline compared to the previous series, dropping from 87.21 per cent to 74.41 per cent. Similarly, Nifty’s rollover rate decreases to 65.12 per cent, below both the previous month’s rate and the three-month average of 76.79 per cent. This suggests that the market is in a state of anticipation, with traders hesitant to carry positions into May F&O series,” said Bisht.

According to ICICIdirect.com, FIIs were shorting in Nifty futures last and the net longs of 33,000 in index futures turned to net shorts of more than one lakh contracts due to negative global cues. Based on this, analysts expect a round of short covering.

Bank Nifty

NSE’s banking index closed the week at 48,201.05 points, higher by 572.95 points or 1.20 per cent from the previous week’s closing of 47,628.10 points.