Options data points to minor pullbacks ahead

The 15,000 strike has the highest Call OI followed by 14,600 strike, 14,800 and 14,500 strikes. Further, 14,500/14,600/15,300 strikes recorded reasonable addition of Call OI. The highest Put OI build-up is at 14,000 strike, followed by 13,500, 13,800 and 13,700 strikes, while 13,800/13,700/14,000/14,400 strikes recorded significant build-up of Put OI. The 14,600 strike witnessed a major offloading of Put OI, followed by 14,700 strike. The 14,600 and 14,700 Call strikes hold the highest Call base, while the Put base is placed at 14,000 strike. Immediate support for the index lies near its last week lows of 14,200 strike, below which current declines might extend towards the 14,000 level. On the higher side, resumption of the trend can be expected only if Nifty moves above 14,500 again. Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "On the derivatives front, Put writers at 14,600 strike were seen unwinding their positions, while Call writers added hefty Open Interest at 14,550 and 14,500 strikes. Put-Call Ratio of OI for the week closed at 1.17 and it indicates more Put writing than Calls. Recent development in derivatives data suggests that profit booking at higher levels could continue in the coming sessions as well." The NSE Nifty closed the week below the 14,500 strike on a marginally negative note amid extreme volatility after making highs near 14,750 levels during the week. The upcoming Union Budget and the results season have prompted sharp stock-specific moves.

Globally, however, equities closed the week with positive bias, but in a range-bound move. Nifty, mid-cap and small-cap stocks also witnessed some profit booking and closed lower. Bisht forecasts that "On downside, the 14,200-14,150 zone would act as an immediate hurdle for Nifty, while 14,550-14,600 would be a strong hurdle."

The price ratio of Bank Nifty-Nifty fell as Nifty is still trading above its weekly low of 14,250, whereas Bank Nifty is trading almost 700 points below its previous weekly low. Analysts predict that due to such under-performance in the banking stocks, upside may be restricted in Nifty.

The volatility index VIX declined from the high of 25 and closed the week near 22 level. Despite a sharp drop in the last two sessions, the volatility index didn't rise, suggesting expectations of limited downsides. Moving towards 25 levels once again can be considered as a sign of caution. "The Implied Volatility of Calls closed at 21.81 per cent, while that for Put options closed at 23.19. The Nifty VIX for the week closed at 22.18 per cent," remarked Bisht.

Moreover, FII activity should also be kept under watch as their buying figure has declined gradually in the last couple of weeks. Hence, a round of consolidation ahead of the Union Budget can be expected in index.

Bank Nifty

The NSE's banking index Bank Nifty closed at 31,167.25 points, a net loss of 1,079.55 points or 3.34 per cent from 32,246.80 points. Banking stocks were the major laggard during the week and they remain in focus for any major recovery in the broader markets.

As per the ICICI Direct.com, Nifty as well as Bank Nifty futures managed to move towards its highest Call base of 14,800 &and 33,000 respectively. However, both the indices failed to gauge follow up momentum. For the major part of the week, Axis Bank along with HDFC Bank moved up, but selling on the last day of the week propelled all the stocks into negative terrain except IDFC first bank. During the week fresh short OI blocks were seen in Bandhan bank followed by Kotak Bank and Indusind Bank whereas profit booking were seen in others which are likely to keep the index move in check. ICICI Direct.com data points to closure in Put OI positions and addition in OTM strike Calls like 32,000, 32,500 and 33,000 are likely to keep index under pressure. Major Put OI concentration is placed in 31,000 strike, below which more downside could be seen. However, if Bank Nifty manages to hold 31,000 in the expiry week bounce could only be seen till 32,000 levels.