Higher Call, Put OI bases at 19,400 strike

The highest concentration of Open Interest (OI) on both the sides of options chain at 19,400 strike pointing to narrow-range fluctuation for the week ahead (July 10-14, 2023) as the support level rose by 400 points to 19,400PE and the resistance level eased by 100 points to 19,400CE.

The 19,400CE has highest Call OI followed by 20,000/ 19,500/ 19,600/ 19,700/ 19,550/ 20,200/ 20,100/ 20,400/ 20,500 strikes, while 19,400/ 19,500/ 20,000/ 19,900/ 20,400 strikes witnessed hefty build-up of Call OI.

Coming to the Put side, maximum Put base is seen at 19,400 followed by 19,300/ 19,000/ 18,800/ 18,900/ 19,100/ 18,500/ 18,600 strikes. Further, 18,800/ 19,000/ 19,300/ 19,400 strikes recorded reasonable addition of Put OI. Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “In the Nifty index, the highest concentration of Call and Put Open Interest was observed at the 19,400 strike. Previously, the maximum Call OI was at the 19,500 strike, while for Put options, it was at the 19,300 strike. In the Bank Nifty, the maximum concentration of Call and Put Open Interest is at the 45,000 strike.”

The derivatives segment witnessed heavy Put writing at ATM and OTM strikes due to sharp moves of almost 450 points seen last week. Nifty is already trading above its major Call base of 19,100 strike. While the recent move can be attributed to quarter ending flows, sustainability at current levels may trigger continued up move due to short covering.

“Indian markets started the week on a positive note and made record highs during the week as bulls continued to rule over the markets, while taking cues from the strong global and domestic factors. Nifty made a record high of 19,523 points, while Bank Nifty marked record high of 45,655 points in past week. However, in the later part of the week, most of the gains were seen pared as traders’ seen booking profits at higher level ahead of the weekend. Nifty ended the week with gains of nearly 0.75 per cent, while the Banking index also managed to close in green territory. During the week, healthcare stocks witnessed buying interest, while media stocks exhibited a significant rebound,” added Bisht.

BSE Sensex closed the week ended July 7, 2023, at 65,280.45 points, a further recovery of 561.89 points or 0.86 per cent, from the previous week’s (June 30) closing of 64,718.56 points. During the week, NSE Nifty too moved up by 142.75 points or 0.74 per cent to 19,331.80 points from 19,189.05 points a week ago.

“Technically both the indices are still looking strong despite a heavy sell off seen on Friday’s session. So, we advise traders to use these dips for creating fresh longs,” remarked Bisht.

India VIX fell 2.60 per cent to 11.53 level. Due to aggressive Put writing, VIX has moved above 11 level despite sharp directional move. Nifty premium was close to 100 points (dividend expectation of nearly 22 points) was relatively lower compare to the last series as retail participants turned bearish on Index, according to ICICIdirect.com.

“The Implied Volatility (IV) for Call options concluded at 10.38 per cent, while Put options closed at 11.29 per cent. The Nifty VIX, which measures market volatility, ended the week at 11.84 per cent. The PCR of OI settled at 1.42 for the week more than the previous week and it indicates more Put writing,” observed Bisht.

Bank Nifty

NSE’s banking index closed the week at 44,925 points, a net gain of 177.65 points or 0.39 per cent from the previous week’s closing of 44,747.35 points.