Support level declining

The latest options data is pointing to divergence in resistance and support levels as the resistance level has moved up by 1,000 points to 19,000CE, while support level eased by 1,500 points to 15,500PE. From F&O data perspective, the NSE Nifty holds the highest Put concentration at 16,5000 strike, while Call option concentration is placed at 19,000 strike as at the end of last week's trading. Hence, the Nifty may consolidate after witnessing sharp declines of almost 1200 points in the last couple of weeks. A fresh directional bias may be seen post the Union Budget.

Highest Call base is seen at 19,000CE followed by 18,000/18,500/ 19,500/ 188,200 strikes. Further, 19,500/ 19,000/ 18,500/18,300 strikes recorded reasonable addition of Call OI. Coming to the Put side, the 15,500 strike witnessed maximum Put OI followed by 15,500/ 16,000/16,700/16,600/17,100 strikes. Moderate build-up of Put OI is seen at 16,700/ 17,300/ 16,500/16,000/ 16,800 strikes.

Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "From the derivatives front, Call writers added hefty Open Interest at 17300 & 17500 strikes, while marginal Open Interest seen adding at 17000 put strike."

"After Indian markets began the February series on negative impressions as both Nifty and Bank Nifty wiped out all its gains to end marginally lower in Friday's session. Nifty ended the week just above 17100 mark, while banking index closed below 38000 mark as traders were seen cautious before the Union Budget due next week," adds Bisht.

For the week ended January 28, 2022, BSE Sensex closed at 57,200.23 points, a further net loss of 1,836.95 points or 3.11 per cent, from the previous week's closing of 59,037.18 points. Registering a drop of 515.20 points or 2.92 per cent, NSE Nifty ended the week at 17,101.95 points from 17,617.15 points a week ago.

Bisht forecasts: "From the technical front, Nifty has strong resistance at its 100-day exponential moving average, which is placed at 17,350 mark. However, Bank Nifty is looking much more promising on charts as compared to Nifty as index can be seen trading above its short and long-term moving averages on daily charts with formation of higher bottom pattern. For the upcoming week, we expect that tug of war among bulls and bears is likely to keep Indian markets on a volatile path as Nifty is likely to trade in a broader range of 16800 to 17500 levels."

The low OI in January F&O series inception continued in February series as well. The February series started with just over one crore shares. Meanwhile, significant closure of long positions was seen from FIIs indicating ongoing profit booking. Fresh accumulation in the index futures may lead to a fresh directional move, as per the ICICIdirect.com.

The January derivatives series saw a zig-zag movement in Nifty that swung in both directions and expired at 17,110 level. Series on-series, the Nifty closed with a loss of 1.72 per cent and the Bank Nifty underperformed a bit as it registered a gain of 6.2 per cent.

On the Rollover front Nifty saw higher rollover of 74.62 per cent versus previous 79.91 per cent and the three-month average of 98.36 per cent with rollover cost of 39.4 point and with unwinding in open interest it indicates some of the longs in the Nifty have not got carried forward. On the open interest front, the Nifty saw a reduction of 13 per cent and is starting the February series on a lighter note with 109.35 lakhs shares in OI.

India VIX declined 1.76 per cent to 20.70 level. "Implied Volatility of Calls closed at 20.59 per cent, while that for Put options closed at 21.22 per cent. The Nifty VIX for the week closed at 21.07 per cent and is expected to remain volatile. PCR of OI for the week closed at 1.64," observed Bisht.

On the volatility front, the US Fed-induced volatility kept Indian markets on the edge. However, India VIX closed the week a tad above 20 level ahead of the Union budget. Volatility may subside significantly post budget and may move towards 16 levels once again in the coming weeks.

Bank Nifty

NSE's banking index closed the week at 37,689.40 points, a net recovery of 115.10 points or 0.30 per cent, from the previous week's closing of 37,574.30 points.

The Bank Nifty on the other hand saw an addition of 1.14 per cent in OI with an increase in prices indicating long build-up seen in the index. Bank Nifty saw a rollover of 84.26 per cent versus the three-month average of 95.57 per cent with rollover cost of 185.95 points. With a high rollover, the Bank Nifty has seen long getting carried forward to the next series.