Scattered OI bases indicate wide-range trading with bullish bias
Nifty premium rises to 75 points, which along with low India VIX of 10.84 level suggests some caution
image for illustrative purpose
The support level remained at 18,700PE for a second consecutive week, while the resistance level marginally rose by 100 points to 18,800CE. Call strikes witnessed major addition of Open Interest (OI), however, in a wide range of 19,200-18,800 strikes. On the Put side, only two strikes 18,700 and 18,800 witnessed significant OI addition, while its major OI positions at remaining strikes. The latest options data on NSE after Friday's session indicates a wide-range of trading with upward movement potential for the week ahead. Strikes in 17,500-18,900 range witnessed reasonable to major Put OI addition and it’s comparatively higher than Call side. Hence, the market is taking strong support with positive bias, observe derivatives analysts.
The 18,800CE has highest Call OI followed by 19,000/ 18,700/ 19,200/ 19,700/ 19,200, 18,900 strikes, while 19,100/ 19,000/ 18,900/ 19,150/ 19,500 strikes recorded significant build-up of Call OI.
Coming to the Put side, maximum Put OI base is seen at 18,700 followed by 18,800/18,500/ 18,750/ 18,600/ 18,500/18,400 strikes. Further, 18,800/18,700/18,750/18,500/18,400 strikes witnessed reasonable to major addition of Put OI.
Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “Regarding derivatives, the 19,000 strike witnessed the highest Call writing, whereas the 18,700 followed by 18,800 strike held the highest Open Interest concentration for Put options.”
Aggressive Put writing was observed in Nifty amid continued resilience seen in the last couple of weeks. Put options concentration is significantly higher than Call strikes as 18700 and 18800 Put strikes hold more than one crore shares each while considering they are near lifetime high levels, as per data from ICICIdirect.com. Call options OI is significantly lower. Hence, the positive bias should be maintained till we witness sharp closure among Put open interest.
“Indian markets experienced considerable volatility throughout the past week, resulting in Bank Nifty closing nearly unchanged Whereas Nifty gained nearly 1.4 per cent over the week. The Nifty index concluded the week above the key resistance level of 18,800 level, while the Bank Nifty was struggling to hold the 44,000 level. Notably, the healthcare, FMCG, and pharma sectors performed well, while profit booking was observed in banking and financial stocks along with IT,” added Bisht.
BSE Sensex closed the week ended June 16, 2023, at 63,384.58 points, a net gain of 758.95 points or 1.21 per cent, from the previous week’s (June 9) closing of 62,625.63 points. During the week, NSE Nifty rose by 262.60 points or 1.41 per cent to 18,826 points from 18,563.40 points a week ago.
Bisht forecasts: “From a technical standpoint, both the indices are still trading in a bullish territory and expected to move steadily towards their all-time highs. For Nifty, 18900 level would act as a strong immediate hurdle while on any downside 18700-18650 zone would provide support to the market. Traders are advised to create fresh longs in case of any dip seen in coming sessions. We expect markets to remain buoyant with stock-specific moves in upcoming sessions.”
“The Implied Volatility for Call options concluded at 10.09 per cent, while Put options closed at 11.25 per cent. The Nifty VIX, a measure of market volatility, ended the week at 11.08 per cent. The PCR of OI settled at 1.29 for the week,” remarked Bisht.
Nifty futures OI rose sharply during the last week and moved to the highest levels. With increase in premium and closure among FII net shorts, fresh long positions were formed in the Nifty with expectations of a continued up move in the coming sessions. Positive bias should continue till the Nifty holds above 18600 levels, according to ICICIdirect.com.
The fear gauge remained below 11 level despite recent events as India VIX eased by 2.17 per cent to 10.84 level. Nifty premium rose sharply to near 75 points, which along with low India VIX suggests some caution. Higher Nifty premium may cause some consolidation in the short-term. Hence, an uptick in VIX remains a key risk for market momentum, as per forecast by ICICIdirect.com.
Bank Nifty
NSE’s banking index closed the week at 43,938.15 points, a modest fall of 50.85 points or 0.11 per cent from the previous week’s closing of 43,989 points. “In the Bank Nifty, the highest OI concentration for both Call and Put options was at the 44,000 level,” observed Bisht.
