Strong build-up of OI holds positive bias

Strong build-up of OI holds positive bias
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Strong build-up of OI holds positive bias

Highlights

Stock-specific trading ahead of May F&O expiry; Call writers covering short positions at 15,100 & 15,200 strikes

The latest options data from NSE points to the support and resistance levels shifting downwards as the highest concentration of Open Interest (OI) was seen at 15,000CE and 14,000PE, 500 points lower than previous week. The 15,500 strike has highest Call OI followed by 15,600/ 15,700/ 15,400/ 15,300 strikes. Further, the 15,700/15,600/ 15,500/ 15,400/ 15,200 strikes recorded reasonable addition of Call OI. Highest Put OI is seen at 14,000PE followed by 14,500/ 14,800/ 13,500/ 14,200 strikes, while 15,100/ 15,000/ 14,900/ 14,200 strikes recorded active Put OI build-up.

Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "Stunner rally was observed in Indian markets in the week gone by as Nifty surged towards ten week high. From derivatives front, once again Call writers were seen covering their short positions at 15,100 and 15,200 strikes, while Put writers were seen shifting at higher bands, which point towards strength in current rally.

The NSE Nifty finally ended above 15,000 points and closed at its highest level since mid-February. Fresh buying in the banking and financial heavyweights helped Nifty move beyond its highest Call base of 15,000 strike. Even mid-cap and small-cap stocks have continued their up move and gained close to four per cent each last week indicating a broad market up move. The ongoing momentum may continue, while 15,400 strike in sight for May derivatives series.

However, sustainability of 15,000 strike will be crucial as it was the highest Call base for the monthly settlement. From the options space, significant Put writing was seen across strikes and 15,000 Put now holds the highest Put base for the week. Hence, continued up move due to closure among Call writers may be seen in the coming sessions. The immediate resistance is likely near lifetime highs of 15,400 level.

BSE Sensex closed the week at 50,540.48 points, a net recovery of 1,807.93 points or 3.70 per cent, from 48,732.55 points. NSE Nifty too rebounded by 497.50 points or 3.38 per cent to 15,175.30 points from 14,677.80 points.

Bisht forecasts that "from technical front, Nifty has given a fresh breakout above the key resistance level of 15,100 and can be seen trading in a rising channel with higher bottom formation. For the upcoming week, it is expected that bulls are likely to remain in charge and keep control over markets. The next immediate hurdle is seen at 15250-15300 zone for Nifty while on downside 14950-14900 zone would be major support for next week."

The volatility index India VIX moved to its lowest level seen in 2021 suggesting continued positive bias in the markets. In case of any extended profit booking, VWAP levels of May series near 14820 are likely to be held.

"The Implied Volatility of Calls closed at 18.20 per cent, while that for Put options closed at 19.52 per cent. The Nifty VIX for the week closed at 19.65 per cent. PCR of OI for the week closed at 1.10," added Bisht. In the F&O space, FII action was primarily seen in the stock futures segment as they bought Rs3,768-crore index futures, Rs11,689-cr index options and sold to the tune of Rs4,123-cr stock futures.

Bank Nifty

NSE's banking index Bank Nifty fell 2,437.35 points or 7.57 per cent to 34,606.90 points from 32,169.55 points. Banking stocks turned the tide once again and ended the week with over seven per cent returns. Analysts forecast that participation from infra and FMCG stocks as well in the coming sessions. "Bank Nifty outperformed all other sectors to reach two month high and closed above 34,600 level. All major banking names like HDFC twins, SBI, ICICI Bank & Axis Bank supported the upside move and boosted positive sentiments among traders," remarked Bisht. According to options data on ICICI Direct.com, the Bank Nifty has the highest Call base at 34,000 strike, but the index is trading well above this level. At the same time, huge Put OI blocks were observed in 34,000 and 3,3500 strikes. From a support prospective, analysts feel the Bank Nifty should hold 33500 this time in the expiry week.

Product Contracts Turnover (Rs/cr) Premium (Rs/cr)
Index Futures 3,80,240 36,619.25 --
Stock Futures 12,77,508 94,234.38 --
Index Options 2,55,58,622 24,68,866.90 16,987.99
Stock Options 31,73,292 2,38,264.15 3,450.18
F&O Total 3,03,89,662 28,37,984.68 20,438.17


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