Key Highlights :
The latest options data on NSE after last Friday session points to upward moves in resistance and support levels for the week ahead. The derivatives segment witnessed aggressive Call writing at ATM and OTM Call strikes, while the Put base was placed at 18,500 strike. Further, the Put-Call Ratio of Open Interest (OI) for the week closed at 1.38, indicating an upward move in the market. Fear gauge, India VIX, also declined 4.07% to 11 level, one of the lowest levels seen in the last two years.
Analyzing the Options Data
The resistance level moved up 500 points to 19,500CE, which has highest Call OI followed by 18,600/ 18,700/ 19,000/ 19,100/ 18,500/ 18,900 strikes, while 18,600/ 18,800/ 19,500/ 19,200/ 18,500/ 18,800 strikes recorded heavy addition of Call OI. Coming to the Put side, maximum Put OI is seen at 18,500 followed by 18,600/ 18,300/ 18,100/ 18,000/ 17,800 strikes. Further, 18,500/ 18,600/18,000/17,800 witnessed reasonable to heavy build-up of Put OI.
Expert Opinion
Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “From the derivatives front, highest Call writing was observed at 18,600 strike, whereas on Put side the highest Open Interest concentration is held at 18500 strike.” He further added that “Indian markets remained volatile in the week gone by and ended the week almost near an unchanged line as Nifty closed above 18,500 level, whereas Bank Nifty closed around 44,000 points. On a weekly basis, auto, FMCG and pharma sectors performed well, whereas profit booking was seen in energy stocks.”
Market Outlook
Bisht forecasts: “Technically, both the indices are struggling to give a fresh move above their key resistance levels. However, the bias is still in favor of bulls as fresh rounds of buying emerge from lower levels. We recommend traders to keep focus on stock-specific action for upcoming week as Index is likely to remain on a volatile path, as we expect some wild intraday moves in upcoming sessions. On the downside, the 18400-18350 zone can provide some support to the Nifty, while the 18650-18700 zone can add some supply to keep a cap on any sharp upside.”
FII Activity
According to ICICIdirect.com, FII activity in F&O space rose marginally due to MSCI rebalancing towards the end of the month. The net positions in index futures turned negative as FIIs created shorts to the tune of Rs2,950 crore. While in stock futures, activities were largely muted, FIIs have turned net sellers in the index options where they sold nearly Rs3,000 crore during the week. In the last couple of sessions, FIIs have gone long in Put options suggesting expectations of some weakness.
Conclusion
The latest options data on NSE points to an upward move in the market, as the Put-Call Ratio of OI for the week closed at 1.38. India VIX also declined 4.07% to 11 level, one of the lowest levels seen in the last two years. However, FII activity in F&O space rose marginally due to MSCI rebalancing towards the end of the month. Going forward, traders are advised to keep focus on stock-specific action for upcoming week as Index is likely to remain on a volatile path, as we expect some wild intraday moves in upcoming sessions.