Options data holds upward bias

Resistance level rose by 800 points to 19,000CE, while the support level moved up by 300 points to 17,700PE as per the latest options data available on NSE after the last Friday session. the 19,000CE has highest Call OI followed by 18,000/ 18,100/ 18,500/ 18,700/18,600/ 18,400/18,300/ 18,200 strikes, while 19,000/18,700/18,600/18,200/18,000/ 18,100 strikes recorded hefty build-up of Call OI.

Coming to the Put side, maximum Put OI is seen at 18,000PE followed by 18,100/ 17,800/ 17,900/ 17,700/ 17,600/17,500/17,400 strikes. Further, 18,000/18,100/18,150/ 17,700/ 17,600/ 17,400 strikes witnessed moderate to significant addition of Put OI.

Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "From the derivatives front, hefty Put writing was observed at 18,000 strike, while Call writers were seen shifting to higher bands."

Derivatives analysts forecast that Nifty may trade with a positive bias with stop loss for long positions to be placed near 17,800 level. The prevailing premium of over 75 points in the Nifty seems to be on the higher side considering low Open Interest. Based on this, analysts expect a round of profit towards 18,000 level. Investors are advised to attempt long on declines.

According to ICICIdirect.com, highest Put base remained at the 18,000 strike. However, considering one of the lowest IVs seen recently, option writers have to move at ATM strikes to get premium, which makes them vulnerable to any sharp moves. However, looking at the sharp decline in volatility in global indices, it is a sign of stability and downsides should be restricted. Nifty may gradually move towards fresh highs in coming weeks.

"Trailing to its previous two-week gains, Indian markets rallied last week as well and Nifty surged above 18,100 mark, while Bank Nifty ended the week above 41,200 level as investors cheered the news of Fed lowering its hawkish stances and would go easy on future interest rate hikes. Nifty witnessed gains of more than 1.5 per cent during the week, while Bank Nifty remained laggard and ended with a little change," added Bisht.

Sectors like pharma, cement and select NBFC should remain in the limelight whereas further consolidation is expected in the technology space due to rising bond yields.

BSE Sensex closed the week ended November 4, 2022, at 60,950.36 points, a further recovery of 990.51 points or 1.65 per cent, from the previous week's closing of 59,959.85 points. NSE Nifty ended the week at 18,117.15 points, higher by 330.35 points or 1.85 per cent, from 17,786.80 points a week ago.

Bisht forecasts: "From the technical, front both the indices are maintaining a sustainable run above all important moving averages. We expect momentum to remain continue towards north in upcoming week as well. However, any dip into the prices should be considered as buying opportunity till Nifty holds above 18,000 mark."

India VIX fell 1.80 per cent to 15.66 level. "Implied Volatility of Calls closed at 14.77 per cent, while that for Put options closed at 15.29 per cent. The Nifty VIX for the week closed at 15.94 per cent. PCR of OI for the week closed at 1.39," remarked Bisht.

FIIs finally turned net buyers in the index Futures segment after almost two months. FIIs bought over Rs1,200 crore last week in index Futures. FIIs are net long of 23000 contracts in the index segment. Further, they added long stock Futures positions as their net longs increased significantly to 1.5 lakh contracts for the November series. In the options segment, FII activity was significantly higher and bought nearly Rs16,000 crore in this segment.

Bank Nifty

NSE's banking index closed the week at 41,258.45 points, a further recovery of 267.6 points or 0.65 per cent, from the previous week's closing of 40,990.85 points. Huge Call OI blocks are placed at 41,500 and 42,000 strikes whereas the Put writing quantum remained intact in 40500 and 40000 strikes. Fresh buying interest should emerge once the index closes above 42000 whereas any dips towards 40500 remain a buying opportunity.