OI bases mostly at ATM strikes
India VIX rose 2.74% to 12.85 level; FIIs have been continuously closing their short positions since mid-March; However, marginal increase in shorts was noticed during last week amid sharp decline in Nifty premium; It suggests build-up of some shorts against their long positions
image for illustrative purpose
The latest options data after the last Friday session on NSE is indicating a range-bound trading for the week ahead as the support level remains at 18,200PE for a second consecutive week, while the resistance level moved up marginally by 100 points to 18,300CE.
The 18,300 strike has the highest Call OI followed by 18,500/ 18,800/18,600/ 18,700/ 18,400 strikes, while 18,500 / 18,000/ 18,600/ 18,300/18,200 strikes witnessed reasonable addition of Call OI.
Coming to the Put side, maximum Put OI is seen at 18,200 followed by 18,300/18,000/18,100/ 17,900 strikes. Further 18,200/ 18,000/ 18,250/ 18,100 strikes recorded significant build-up of Put OI.
Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “From the derivatives front, hefty OI addition has been observed at 18,200 Put strike, which will act as a strong support level for Nifty moving forward.”
With the upward move in the last week, OI positions were shifted to ATM 18,200 and 18,300 strikes. Considering the rally, analysts forecast stability and restricted downsides around 18150-18200 levels as NSE Nifty may gradually move towards 18,500 points.
FIIs have been continuously closing their short positions since mid-March along as the market moving up. However, marginal increase in shorts was experienced last week along with a sharp decline in Nifty premium. It seems like some shorts were formed against their long positions.
“Indian markets rebounded last week as NSE Nifty ended with gains of more than one per cent, while the banking index outperformed to end the week with gains of more than 2.50 per cent. A slew of weak economic data points from the US and China hinting towards a slower pace of economic growth disturbed the mood of the Indian markets over the week, but lower levels buying once again emerged in later part of the week as Nifty ended above key level of 18,300 points,” added Bisht.
BSE Sensex closed the week ended May 12, 2023, at 62,027.90 points, almost flat on a negative note, an encouraging rebound of 973.61 points or 1.59 per cent, from the previous week’s (May 5) closing of 61,054.29 points. NSE Nifty ended the week at 18,314.80 points, a miniscule addition of 245.80 points or 1.36 per cent, from 18,069 points a week ago.
Bisht forecasts: “Technically, both the indices are likely to remain bullish in upcoming sessions as well with volatility likely to grip the markets. Traders are advised to create fresh longs in case of any correction seen on the back of profit booking. On the higher side, the 18400-18500 zone would act as a strong hurdle for the index going forward.”
India VIX rose 2.74 per cent to 12.85 level. The volatility index rose sharply from 11 to 13 in the last two weeks due to closure among Call strikes. Positive bias is likely to continue till it holds below 13 level. Short-term profit booking leg to be seen if India VIX moves above 13 level once again.
“The Implied Volatility (IV) of Calls closed at 11.86 per cent, while that for Put options closed at 10.77 per cent. The Nifty VIX for the week closed at 13.22 per cent. PCR of OI for the week closed at 1.28,” remarked Bisht.
Bank Nifty
NSE’s banking index closed the week at 43,793.55 points, a net recovery of 1,132.35 points or 2.65 per cent from the previous week’s closing of 42,661.20 points.
