Wide-Spread OI Bases Signal Broad-Based Trading

The resistance level rose by 1,500 points to 26,500CE, while the support level declined by 1,250 points to 21,850PE as per the latest data on NSE. The options data is indicating to wide-range trading for this week, opine derivatives analysts.

The 26,500CE has highest Call OI followed by 26,000/ 25,500/ 25,000/ 24,500/ 24,400/ 24,000 strikes, while 24,500/ 24,400/ 24,800/ 25,200/ 26,000/ 26,500 strikes recorded heavy build-up of Call OI. And neglible OI fall seen on select Call ITM strikes.

Coming to the Put side, maximum Put OI is at 21,850PE followed by 22,500/ 22,900/ 23,200/ 23,400/ 23,300/ 23,700/ 23,000/ 24,100 strikes. Further, 23,700/ 23,300/ 23,200/ 22,500/ 22,350 strikes witnessed moderate addition of Put OI. Only 2 Put OTM strikes- 22,200/22,000- and one ITM strike 24,400 clocked miniscule OI fall.

Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “In the derivatives market, the highest Call Open Interest for Nifty seen at the 24,500 and 24,200 strikes, while the notable Put Open Interest was at the 24,000 and 23,700 strikes.”

Despite Friday’s sharp fall, highest Call writing base moved up to 26,500 OTM strike. However, aggressive Put writing was also visible at select strikes as maximum OI building at 21,850PE. Nifty is expected to sustain its current level as short-covering rally toward 24,500 can’t be ruled out. Hence, a fresh bout of weakness is more likely if Nifty breaches the 23,900 level again.

Auto sales numbers surprised the market, triggering a buying activity in auto shares last week, which helped the market close on a positive note for the week. NSE Nifty ended with an approximate gain of 0.8 per cent, while Bank Nifty closed in the red, down by a slight 0.6 per cent. Most sectorial indices closed in the green, with the consumer durable, financial services, and auto sectors emerging as the top gainers for the week. Conversely, the realty and banking sectors were the main laggards,” added Bisht.

BSE Sensex closed the week ended January 3, 2025, at 79,223.11 a modest recovery of 524.04 points or 0.66 per cent, from the previous week’s (December 27, 2024) closing of 78,699.07, points. During the week, NSE Nifty too inched up by 191.35 points or 0.80 per cent to 24,004.75 points from 23,813.40 points a week ago.

Bisht forecasts: “From a technical perspective, the Nifty continues to trade below the 100EMA, after facing resistance at this level. Similarly, the Bank Nifty also encountered resistance at its 100EMA and saw a correction. For the Nifty, support is anticipated around 23,700, while resistance is expected at 24,400.”

Nifty OI in futures segment rose marginally since the beginning of the December F&O series. The futures OI rose from over 1.07 crore shares to nearly 1.17 crore shares. It’s pointing to a moderate build-up of short positions. A breakout beyond 24,500 could trigger fresh direction on the upside, potentially driving the index toward the 25,000 level in subsequent sessions, according to ICICIdirect.com.

The volatility index fell sharply after the nearly one per cent fall on Friday as India VIX fell 1.09 per cent to 13.59 level. “Implied Volatility for Nifty’s Call options settled at 13.15 per cent, while Put options conclude at 14.07 per cent. The India VIX, a key market volatility indicator, closed the week at 13.74 per cent. The Put-Call Ratio of Open Interest for the week was 1.23,” observed Bisht.

Bank Nifty

NSE’s banking index closed the week at 50,988.80 points, lower by 308.15 or 0.60 per cent from the previous week’s closing of 48,292.25 points. “For Bank Nifty, the prominent Call Open Interest was seen at the 52,000 and 51,500 strikes, whereas notable Put Open Interest at the 51,000 strike,” remarked Bisht.