Investors Seeking Hedge Cover Amid Downside Risks

The volatile trading last week made options premiums expensive and ATM straddle pricing is more than two per cent. However, Implied Volatility (IV) fell significantly during the last week. The highest Call OI is at 23,850CE followed by 23,900/ 24,000/ 23,800/ 23,500/ 23,450/ 23,600/ 23,550/ 23,400 strikes, while 23,850/ 23,900/23,950/23,750 recorded hefty to reasonable build-up of Call OI. Remaining all the ITM and OTM strikes witnessed fall in Call OI.

Coming to the Put side, maximum Put OI is seen at 23,850PE followed by 23,800/ 23,750/ 23,600/ 23,400/ 23,200/ 23,100/ 23,900/ 22,000 strikes. Further, 23,850/ 23,800/ 23,750/ 23,700/ 23,800/ 23,500/ 23,400 strikes hold moderate addition of Put OI. Put OI declined on remaining OTM strikes.

The 23,850 strike on both sides of options chain holds highest Open Interest (OI). Thus it’s indicating rising market interest and potential price action at that specific level. The higher Put OI is also pointing to moderate bearish tone, while suggesting rising hedge positions against potential downside risks.

Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “In the derivatives market, prominent Call Open Interest for Nifty seen at the 24,000 strike, while the notable Put Open Interest was at the 23,500 strike.

Put writers are more active as compared to Call indicating bullish undertone. For Bank Nifty, the prominent Call Open Interest was seen at the 55,000 strike, whereas notable Put Open Interest at the 51,000 and 54,000 strikes.

According to ICICIdirect.com, OI in Nifty futures remained on the lower side as sharp move triggered closure of positions. FIIs net short positions fell marginally to near one lakh contracts. Short covering is likely if Nifty sustains above 23,500 level.

“Ahead of the Q4 earnings announcement last week, the banking sector outperformed the broader market.

The Bank Nifty closed with a weekly gain of approximately 6.5 per cent, while the Nifty underperformed, posting a gain of around 4.5 per cent. Buying was witnessed across sectors, with banking and financials leading the rally, followed by media and infrastructure,” added Bisht.

For the truncated week (no trading on Mon/Fri) ended April 18, 2025, BSE Sensex closed at78,553.20 points, a huge recovery of 3,395.94 points or 4.51 per cent, from the previous week’s (April 11) closing of 75,157.26 points. NSE Nifty too surged higher by 1,023.10 points or 4.48 per cent to 23,851.65 points from 22,828.55 points a week ago.

Bisht forecasts: “The market is expected to remain volatile with a positive undertone. Intraday volatility may persist, so traders are advised to remain cautious. In the upcoming sessions, Nifty is likely to face resistance near 24,200 levels, while support is seen around 23,500 levels.”

India VIX fell 2.51 per cent to 15.47 level. “Implied Volatility (IV) for Nifty’s Call options settled at 14.58 per cent, while Put options conclude at 15.12 per cent. The India VIX, a key market volatility indicator, closed the week at 15.87 per cent. The Put-Call Ratio of Open Interest (PCR OI) for the week was 1.04,” remarked Bisht.

Bank Nifty

Bank Nifty NSE’s banking index closed the week at 54,290.20 points, a modest decline of 3,287.85 or 6.44 per cent from the previous week’s closing of 51,002.35 points.