Resistance, support levels shifting to higher bands

Though the stock market moved in a narrow range, the options data on NSE is pointing to an upward movement of support and resistance levels in the range of 400-500 points. The resistance level moved up by 500 points to 18,500 and support level rose by 400 points to 17,400 strike.

The 18,500 strike has highest Call Open Interest followed by 18,000/ 17,800/ 17,600/17,700 strikes. Further, 18,500/ 17,600/17,500/17,700 strikes recorded moderate addition of Call OI.

Coming to the Put side, maximum Put OI is seen at 17,400 strike followed by 17,500/17,000/ 17,200 strikes. The 17,400/ 17,000/ 17,100/ 17,500 strikes recorded reasonable build-up of Put OI.

Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "From the derivatives front, Call writers added hefty Open Interest at 17,600 strike, while Put writers remained active at 17,500 & 17,400 strike."

For the week ended October 1, 2021, BSE Sensex closed at 58,765.58points, a loss of 1,282.89 points or 2.13 per cent, from the previous week's closing of 60,048.47 points. Registering a decline of 321.15 points or 1.79 per cent, NSE Nifty ended the week at 17,532.05points from 17,853.20 points a week ago.

Bisht forecasts: "From the technical front, Nifty has managed to take support at its 20 days exponential moving average on daily interval and also managed to close above that. For upcoming week we expect markets to remain on volatile path and likely to consolidate at higher levels before taking a next leg towards record highs. On downside 17,400-17,250 zone would act as a strong support area for Nifty, while 17,650-17,700 would be an immediate hurdle for next week."

From a rollover perspective, the NSE Nifty began the October F&O series with relative lower OI of 1.16 crore shares, which is significantly lower than the OI of almost 1.55 crore shares seen during the September series. Moreover, FIIs' net long positions fell to just 22,000 contracts from near 60,000 contracts seen at the inception of the September series suggesting ongoing liquidation pressure.

Bisht further adds: "Indian markets started October series with negative impression as Nifty indices slipped back below 17,550 level on the back of profit booking. Bank Nifty also ended the week below 37,500 level taking cues from weak global markets."

Nifty rollover to October F&O series was at 74.98 per cent as against 83.98 per cent. Bank Nifty October rollover was 83.47 per cent as against 79.08 per cent. Market-wide rollover was 91.87 per cent from previous month's 88.90 per cent. The Nifty futures began the October series with an OI of 1.22 crore shares versus 1.31 crore shares in OI.

The September futures and options (F&O) series witnessed a sharp rise in Nifty as the index made its lifetime high at around 17,947 points. Series-on-series, the NSE Nifty recorded a net gain of six per cent, while Bank Nifty moved up five per cent.

According to sharekhan.com, the October series started with Rs188,867crore versus Rs167,608 crore in stock futures, Rs21,513 crore versus Rs21,735 crore in Nifty futures and Rs301,776 crore versus Rs250,610 crore in index options and Rs84,648 crore versus Rs61,512 crore in stock options.

Analysts see an immediate support at September series VWAP levels of 17,400 points, below which profit booking may extend towards 17,250 and 17,000 as well. On the higher side, a fresh uptrend can be seen if the NSE Nifty sustains above 17,700 points. But the significant OI build-up at OTM Call strikes indicates unlikely major reversal.

India VIX declined by 6.48 per cent to 17.21 level. The volatility index not subsided much and is still hovering above 17 level. At such high volatility, extended profit booked ahead of results can't be ruled out. In such a scenario, we believe stocks from banking and pharma space may see some resilience, according to ICICI Direct.com.

"The Implied Volatility of Calls closed at 16.84 per cent, while that for Put options closed at 17.54 per cent. The Nifty VIX for the week closed at 18.4 per cent and is expected to remain volatile. PCR of OI for the week closed at 1.46," remarked Bisht.

Bank Nifty

NSE's banking index closed the week at37,225.90 points, a net loss of 604.4 points or 1.59 per cent, from the previous week's closing of 37,830.30 points.