Options data points to narrow trading range

Reflecting a shrinking trading range for the week ahead, the resistance level fell by 400 points to 22,600CE and the support level moved up by 300 points to 22,300PE.

The 22,600CE has highest Call OI followed by 22,300/ 22,500/ 22,400/ 22,700/ 23,000/ 22,200 strikes, while 22,300/ 22,350/ 22,600/ 22,70022,400 strikes recorded heavy build-up of Call OI. OI offloading is visible at deep OTM/ITM strikes in Call options.

Coming to the Put side, maximum Put OI is seen at 22,300PE followed by 22,000/ 22,400/ 21,700/ 21,800/ 22,500 strikes. Further, 22,300/22,350/ 22,400/ 22,450/ 22,250/ 22,200 strikes witnessed significant addition of Put OI. Fall in Put OI is seen at deep OTM strikes in the 22,150-21,450 range.

Nifty regained 22,000 mark after hitting 21,700 low last week in the wake of major volatility across the globe. Rate cut by the Swiss central bank infused positive bias into risk assets. Indian indices also recovered sharply from lows. Broader markets have recovered sharply from lows to close the week with gains of more than one per cent. Nifty surpassed the hurdle of series VWAP of 22,200 in the shortened settlement week. Aggressive longs should be avoided till Nifty is not able to sustain above this level.

As per ICICIdirect.com, significant Put writing is visible at ATM and OTM strikes in the recent up move with highest Put base placed at 22,000 strike. While Nifty has managed to close above 22,000 level for the last few weeks despite high volatility, a move below these levels may trigger another round of weakness in the market.

BSE Sensex closed the truncated week (no trading on Monday and Friday) ended March 28, 2024, at 73,651.35 points, a recovery of 819.41 points or 1.12 per cent, from the previous week’s (March 22) closing of 72,831.94 points. For the week, NSE Nifty also up by 230.15 points or 1.04 per cent to 22,326.90 points from 22,096.75 points a week ago

India VIX rose 1.02 per cent to 12.83 level. The leverage in Nifty futures near month fell to nearly one crore shares. FIIs closed some of their shorts ahead of monthly settlement. The 22,200 is crucial in the short term to sustain the current upward move. Investors are advised to take fresh longs if Nifty moves above this level.

On March 28, monthly and quarterly expiries took place, while FY24 also concluded on the same day. This led to higher volatility. Previously in two sessions, the volatility index fell sharply. Hence, another round of up move in the index can’t be ruled out.

FIIs in F&O space closed some shorts in both index futures and Call options amid high volatility. Net short positions moved to 72k from nearly 95k seen during the week. In the stock futures segment, significant stock specific activities were seen as FIIs bought worth Rs11,700crore. On the other hand, despite the significant volatility, FIIs sold nearly more than Rs82k crore in index options.

Bank Nifty

NSE’s banking index closed the week at 47,124.60 points, higher by 260.85 points or 0.55 per cent from the previous week’s closing of 46,863.75 points.”