Resistance, support levels remain same for 2nd week
Put-Call ratio of OI at 1.48 indicates more Put writing; Bank Nifty-Nifty price ratio may consolidate at 2.38 levels
For the second consecutive week, the options data from NSE holds the same resistance and support levels based on the Open Interest (OI) on Calls and Puts. The highest OI is at 16,000CE and 14,000PE after the trading hours on last Friday (February 12, 2021). The highest Call OI concentration is at 16,000CE followed by 15,500, 15,200 and 15,300 strikes. 15,300/15,500/15,800 strikes recorded reasonable Call OI addition.
Coming to the Put side, the 14,000PE has the highest Put OI followed by 14,500, 14,700, 14,800 and 15,100 strikes. Other strikes 15,000/ 15,200/14,800/ 14,500/14,700 witnessed significant addition of Put OI.
"From derivatives front, Call writers were seen adding hefty Open Interest at 15,200 & 15,300 strikes, while Put writers were seen active at 15,000 strikes. The Implied Volatility (IV) of Calls closed at 20.72 per cent, while that for Put options closed at 21.43," said Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd.
As per the data on ICICI Direct.com, significant Call option concentration is placed at ATM 15,200 strike for coming weekly settlement followed by 15,500 strikes. Hence, a move above 15,200 may take the index towards 15,500 towards settlement. On the lower side, immediate and major support for the Nifty remains at the 15,000 strike. The Nifty continued in range bound trading amid high intraday volatility. After a gap up opening on Monday, the index consolidated for the rest of the week where 15,000 acted as support on multiple occasions. Broader markets have significantly outperformed benchmarks and small-cap indices gained more than three per cent, while the rest have seen gains of close to one per cent.
For the week ended February 12, 2021, BSE Sensex closed at 51,544.30 points, a net gain of 812.67 points or 1.60 per cent, as against 50,731.63 points. NSE Nifty recovered by 239.05 points or 1.60 per cent and closed at 15,163.30 points from 14,924.25 points. Bisht predicted that "for upcoming sessions, we expect markets to remain volatile with some stock-specific action on back of the ongoing result season. However, a decisive below 15,000 levels this time could add further selling pressure in Nifty, while above 15,300 level; Nifty could take a leap towards 15,500 levels as well." Finally, the volatility index India VIX took some breather and consolidated at 22 levels. As major events are over, analysts believe a further decline in volatility would be seen in coming sessions and any surge from these levels can be considered as a sign of caution after sharp upsides."The Nifty VIX for the week closed at 23.05 per cent. Put-Call Ratio of OI for the week closed at 1.48 and it indicates more Put writing than Calls," added Bisht.
The NSE's banking index Bank Nifty closed at 36,108.90 points, a net gain of 454.40 points or 1.27 per cent from 35,654.50 points. Once again the major mover remains the banking space, but even the Bank Nifty failed to surpass its Friday's high and remained largely range bound.
"Banking stocks outperform in later part of the week with ICICI Bank, Axis Bank along with HDFC taking the lead," said Bisht.
The Bank Nifty commenced the week with lower option OI base at ATM strike, whereas positions were in far OTM options indicated possible consolidation in next sessions. The 35,500 Put holds the maximum OI whereas the highest Call base is placed at 37,000 strikes. Analysts predict consolidation in this range for the week. Some outperformance was seen in the Bank Nifty when compared to the broad-based Nifty. However, the current price ratio of Bank Nifty/Nifty may consolidate near 2.38 levels, while resistance for the ratio can be seen near 2.4. Due to this, no major outperformance is expected from banking stocks.
Majority private banking stocks are positive and banks such as Axis Bank, HDFC Bank and Kotak Bank may find support after 2-3 per cent decline, whereas supportive action is expected from other banking stocks. After the RBI policy, the NSE's banking index moved in a range with stock-specific action. PSU banks performed well, whereas no major moves were seen in private banks. Among mid-cap banks, IDFC First Bank and Federal Bank may do well.