Fresh Put OI build-up at ATM strikes suggests limited downside

The latest options data on NSE after the last Friday session is pointing to a possible moderate fluctuation this week as the support level moved up by 200 points to 19,200PE and the resistance level rose by100 points to 19,300CE.

The 19,300CE has highest Call OI followed by 19,500/ 20,000/ 19,400 /19,600/ 19,200/ 19,700/ 19,800 strikes, while 19,300/ 19,400/ 19,850/ 19,750/ 19,250 strikes recorded reasonable addition of Call OI.

Coming to the Put side, maximum Put OI is seen at 19,200/ 19,100/ 18,800/ 19,300/ 18,600/ 19,000 strikes. Further, 19,200/ 19,300/19,150 strikes witnessed moderate build-up of Put OI, while minor OI fall at 18,400-18,200 OTM strikes.

In the options segment, heavy writing was recorded at 19,000 and OTM Call strikes at the beginning of the November F&O series. Short covering on Friday resulted in closure of positions. However, fresh Put writing was observed at the ATM strike suggesting limited downside this week. Analysts expect short covering may continue as long as Nifty is holding above 18,900 level.

Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “A closer look at the options market reveals interesting insights. The highest Call Open Interest for Nifty is concentrated at strikes 19,300 and 19,500 points. Conversely, the highest Put Open Interest is observed at strike 19,200, suggesting a significant support level.”

“In the past week, the Indian stock market displayed notable resilience with Nifty closing at a 0.96 per cent gain, while Bank Nifty surged even higher, closing with a 1.25 per cent gain. This positive momentum indicates a bullish sentiment among investors. Among the sectors, auto and metal emerged as the major laggards in relation to Nifty. On the flip side, realty and media sectors demonstrated significant strength, outperforming the broader market,” added Bisht.

BSE Sensex closed the week ended November 3, 2023, at 64,363.78 points, a net recovery of 580.98 points or 0.91 per cent, from the previous week’s (October 27) closing of 63,782.80 points. During the week, NSE Nifty too moved up by 183.35 points or 0.96 per cent to 19,230.60 points from 19,047.25 points a week ago.

Bisht forecasts: “In the recent performance of Nifty and Bank Nifty, along with the dynamics in various sectors, suggests a cautiously optimistic outlook for the Indian stock market. Investors should closely monitor key support and resistance levels, which may provide further insights into the market’s direction in the coming weeks. Nifty is expected to trade in the range of 19,400 on upside whereas on downside it may test 19,000 as support.”

India VIX fell 1.74 per cent to 10.88 level. India VIX fell sharply on Friday and closed the week below 11 level.

“In terms of Implied Volatility, Call options for Nifty settled at 9.77 per cent, while Put options concluded at 10.09 per cent. The India VIX, which serves as a gauge of market volatility, closed the week at 10.88 per cent. The Put-Call Ratio of Open Interest stood at 1.17 for the week,” observes Bisht.

Considering most of the results from heavyweights are over, focus might be shifted to mid-cap stocks and Nifty may hover in the 18800-19250 range for some time.

Bank Nifty

NSE’s banking index closed the week at 43,318.25 points, higher by 536.25 points or 1.25 per cent from the previous week’s closing of 42,782 points. “Turning to Bank Nifty options, the highest Call Open Interest is clustered at strikes 43,500 and 44,000. Conversely, the highest Put Open Interest is concentrated at strikes 43,000 and 43,300, indicating support levels for Bank Nifty,” remarked Bisht.

Mkts Cautiously Optimistic

8 Heavy OI build-up at 19,300CE-19,200PE

8India VIX falls 1.74% to 10.88 level

8PCR of OI at 1.17

8IV on Nifty for Calls at 9.77%, for Put options at 10.09%