Options OI bases shifting to upper bands
Support level rose 2,800pts to 23,000PE, while resistance level also up by 1,000pts to 24,000CE
image for illustrative purpose
The latest options data on NSE after Friday’s session is pointing to narrowing the trading range unlike huge volatility that occurred in the last week. The support level moved up by 2,800 points to 23,000PE, while resistance level also rose by 1,000 points to 24,000CE.
The 24,000CE has highest Call OI followed by 25,000/ 24,500/ 24,350/ 24,800/23,800/ 23,700/ 23,500/ 23,000/ 23,400, while 24,800/ 25,000/ 24,350/ 24,500/ 24,350/ 24,000/ 23,900/ 23,700/ 23,200 strikes. Deep Call ITM strikes recorded marginal drop in OI. Heavy Call writing was observed across the board with significant writing at 23,500 strike.
Coming to the Put side, maximum Put OI is seen at 23,000PE followed by 22,500/22,800/ 23,200/ 22,300/ 22,700/ 22,400/ 20,150/ 20,200/ 20,500/ 20,800 strikes. Further, 20,150/ 20,200/ 20,700/ 21,600/ 21,800/ 22,000/ 22,500 strikes witnessed moderate to heavy build-up of Put OI.
BSE Sensex closed the week ended June 7, 2024, at 76,693.36 points, a net fall of 2,732.05 points or 3.69 per cent, from the previous week’s (May 31) closing of 73,961.31 points. For the week, NSE Nifty also fell by 759.45 points or 3.37 per cent to 23,290.15 points from 22,530.70 points a week ago.
Nifty was quite volatile ahead of Lok Sabha poll results. Not only domestic investors, but FPIs also became very concerned about the outcome of elections. Hence, FPIs preferred to be net sellers. Apart from banking, most of the other sectoral heavyweights remained under pressure as FIIs sold nearly Rs12,000 crore last week. May F&O series concluded near VWAP of 22,500. Analysts expect short covering in Nifty and continued directional move can be seen in the coming week.
FIIs preferred to hedge their portfolio against volatility post-election outcome and their net shorts rose to over 3 lakh contracts. As a result, Nifty futures Open Interest moved to its highest levels seen since Covid.
FIIs remained net sellers for another week in Indian equities ahead of key events as Nifty moved back towards 22,500 level. FIIs have sold nearly Rs2,600 crore last week and during the May month, FIIs have sold nearly Rs30,000 crore in secondary markets. However, domestic institutions extended support by buying Rs14,900 crore last week.
Along with the delivery-based selling recorded in the cash segment, FIIs took fresh shorts aggressively. In the last sessions their net shorts in Index futures rose to over 3 lakh contracts from just 16,000 contracts seen last week. On the other hand, retail participants increased their longs significantly ahead of union elections.
India VIX on last Friday rose 0.49 per cent to 16.88 level. Implied Volatility (IV) of 24,000CE, which has highest Call OI, is 21 and 18.57 for 23,000PE.
Bank Nifty
NSE’s banking index closed the week at 49,803.20 points, marginally up by 819.25 points or 1.67 per cent from the previous week’s closing of 48,983.95 points.
