OI bases moving to higher bands
Put-Call Ratio of Open Interest at 1.17 indicating more Put writing than Calls, which is a bullish sign
Further upward momentum is more likely this week as the latest options data on NSE, after the last Friday session, is pointing to wider trade range amid Open Interest (OI) bases moving to higher strikes on both sides of the options chain.
The 23,000CE has highest Call OI followed by 22,800/ 22,100/ 22,00/ 22,500/ 23,500/ 22,400 strikes, while 22,100/ 22,800/ 22,700/ 22,300/ 23,000/ 22,950 strikes recorded reasonable addition of Call OI. On the Put side, maximum Put OI is seen at 22,000PE followed by 21,000/ 21,500/ 21,200/ 21,700/21,600/ 21,300/22,100 strikes. Further, 21,000/ 21,100/ 21,200/ 21,500/ 21,850/ 22,000 22,100 strikes witnessed moderate build-up of Put OI.
Deep OTM strikes on Call and Put sides recorded limited offloading, while OI rose at majority OTM strikes.
Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “In the Nifty options segment, the highest Call Open Interest is held at 23,000 strike and significant at 22,100 strike whereas on the Put side, significant Open Interest is at the 22,000 strike.”
“Nifty and Bank Nifty both concluded the week with marginal gains. Nifty recorded a gain of over one per cent, while Bank Nifty saw an uptick of more than 1.5 per cent, driven by increased buying interest in PSU banks. In the previous week, major gains were witnessed by Auto, PSU banks along with Oil & Gas sectors, while metal, FMCG and media remained under pressure,” added Bisht.
BSE Sensex closed the week ended February 16, 2024, at 72,426.64 points, a net recovery of 831.15 points or 1.16 per cent, from the previous week’s (February 9) closing of 71,595.49 points. During the week, NSE Nifty too gained by 258.20 points or 1.18 per cent at 22,040.70 points from 21,782.50 points a week ago.
Bisht forecasts: “On the technical front, the current trading range for Nifty is 21,800-22,200, serving as a crucial indicator for its future trend. A breakdown below 21,800 could signify additional downside momentum or increased profit booking, while a positive outlook is intact for Nifty till it continues to trade above the psychological level of 22,000. Individual traders should monitor the rising India VIX as it could serve as a cautious indicator for the market.”
“Implied Volatility for Nifty’s Call options settled at 13.99 per cent, while Put options concluded at 14.53 per cent. The India VIX, a key indicator of market volatility, concluded the week at 15.23 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.17 for the week indicating more Put writing than Calls, which is a bullish sign,” observes Bisht.
India VIX suffered a minuscule fall of 0.016 per cent to 15.22 level, but remained at a higher level above 15. As major events and results are over now, the present high volatility suggests some caution. Hence, a move below 21650 level may induce further cuts in headlines indices.
Bank Nifty
NSE’s banking index closed the week at 46,384.85 points, up 750.30 points or 1.64 per cent from the previous week’s closing of 45,634.55 points. “For Bank Nifty, the highest Call Open Interest is at the 47,000 strike, while the highest Put Open Interest is at the 46,000 strike,” remarked Bisht.
Bank Nifty witnessed a bout of short covering in the futures segment also. It may sustain current levels. Immediate hurdle for Bank Nifty is seen in 46,500-46,800 range this week.
