Highest Call & Put OI bases at 18,200 strike suggest consolidation

The 18,200CE has highest Call OI followed by 19,100/ 18,100/ 18,300/ 18,400 strikes, while 18,100/18,100/ 18,200/ 18,800/18,300 strikes recorded significant build-up of Call OI. Coming to the Put side, maximum Put OI is seen at 18,200PE followed by 18,100/17,800/17,500/ 17,600/ 18,000 strikes. Further, 17,800/ 17,500/ 18,100/ 17,900/ 17,600 strikes witnessed reasonable addition of Put OI.

Last week recorded an aggressive Call writing in the 18,200-18,500 range. NSE Nifty was trading below the weekly Put base of 18,100-18,200 strike and it may pull back towards 17,800 points. On a monthly expiry perspective, derivatives experts forecast a positive bias in the index as it’s expected to move upwards till it holds 17,800 level. For the week ahead, Nifty may consolidate in the broader range of 17,800-18,200 levels.

Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “From the derivatives front, Call writing was once again observed at 18,100 & 18,200 strikes, while marginal Open Interest addition was observed at 18,000 Put strike.”

“Banking index however, ended the week with a loss of over one per cent, while Nifty closed the week near the unchanged line. Indian markets remained highly volatile in the week gone by, as most of the gains witnessed during the week surrendered in Friday’s session. Intense selling pressure was observed on the back of profit booking,” added Bisht.

BSE Sensex closed the week ended May 5, 2023, at 61,054.29 points, almost flat on a negative note, an encouraging rebound of 58.15 points or 0.09 per cent, from the previous week’s (April 28) closing of 61,112.44 points. NSE Nifty ended the week at 18,069 points, a miniscule addition of 440.95 points or 0.02 per cent, from 18,065 points a week ago.

Bisht forecasts: “Technically, both the indices have shown resilient performance during the past weeks and now at the current juncture they are facing strong hurdles on the higher side. For Nifty, the 18200-18250 zone would act as an immediate hurdle, while the 17950-17900 zone would provide support on any downside. We expect markets to remain volatile in upcoming week as well, with bias likely to remain in favour of bulls. We advise traders to use any dip to create fresh longs as strong uptrend is expected in markets for upcoming weeks as well.”

FII net shorts fell considerably in April to just 8,000 contracts from over 1.45 lakh contracts on unabated short covering. In the last two weeks FII inflows were encouraging in the equity segment. FIIs bought Rs10,000 crore. Hence, any major reversal seems unlikely. Any decline would be an opportunity to create a fresh long position.

India VIX moved up by 4.79 per cent to 12.30 level, highest level since March 31. Stock-specific volatility may remain high amid the results season. There may not be any type of broader weakness as long as VIX moves below 15 level.

“The Implied Volatility (IV) of Calls closed at 9.72 per cent, while that for Put options closed at 10.43 per cent. The Nifty VIX for the week closed at 11.73 per cent. PCR of OI for the week closed at 1.32,” remarked Bisht.

FIIs in F&O space remained sluggish during the last week. The short covering in index futures continued as FIIs bought Rs1,130 crore in the segment. It further reduced FIIs’ net shorts positions. At the weekend, the focus shifted to stocks where FIIs bought over Rs829 crore.

Bank Nifty

NSE’s banking index closed the week at 42,661.20 points, a net recovery of 572.20 points or 1.32 per cent from the previous week’s closing of 43,233.90 points.