Rising Implied Volatility Signals Grim Outlook

The latest options data on NSE is pointing to a rise of 1,000 points in resistance level to 26,000CE and 500 points in support level to 24,000PE. The Implied Volatility (IV) marginally eased on Put side, while it rose 25 per cent at 26,000CE, which has the highest Call OI base. Higher IV indicates greater chances of volatility of specific strike. The 26,000CE has highest Call OI followed by 25,000/ 26,100/ 25,400/ 25,100/ 25,900/ 24,700/ 24,50024,600 strikes, while 25,000/ 26,000/ 25,500/ 25,800/ 24,500/ 24,400 strikes recorded heavy build-up of Call OI. And negligible Call OI fall is visible at select deep Call ITM strikes.

Coming to the Put side, maximum Put OI is seen at 24,000PE followed by 23,500/ 24,300/ 24,400/23,800 strikes. Further, 24,000/ 24,200/ 24,300/ 23,500 strikes witnessed modest addition of Put OI. And marginal fall in Put OI is visible at few Put OTM strikes.

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 24,500 and 25,000 strikes, while the notable Put Open Interest was at the 24,000 strike. For Bank Nifty, the prominent Call Open Interest was seen at the 55,500 strike, whereas notable Put Open Interest at the 55,000 strike.”

“Both broader indices, Nifty and Bank Nifty, closed in the green, witnessing gains of around one per cent and approximately 0.85 per cent, respectively. Despite persistent geopolitical tensions between India and Pakistan that continue to pressure market sentiment, positive earnings reports and optimism over a potential India-US trade deal have contributed to foreign institutional investors making net inflows last week, supporting a positive sentiment. Media, small-cap, and metal sectors came under the most pressure and ended as the top losers, while oil & gas, realty, and infrastructure sectors emerged as the top gainers,” added Bisht.

For the week ended May 2, 2025, BSE Sensex closed at 80,501.99 points, a further rise of 1,289.46 points or 1.62 per cent, from the previous week’s (April 25) closing of 79,212.53 points. NSE Nifty too moved higher by 307.35 points or 1.27 per cent to 24,346.70 points from 24,039.35 points a week ago.

Bisht forecasts: “Oscillators indicate that the market is showing signs of tiredness, suggesting potential consolidation at higher levels. Traders are advised to closely monitor position build-up during the week, as it could further drive market movement. Until then, a cautious approach is recommended. In the upcoming sessions, Nifty is expected to face resistance near 24,600, with support around 23,800.”

India VIX marginally rose 0.19 per cent to 18.26 level. “Implied Volatility for Nifty’s Call options settled at 16.19 per cent, while Put options conclude at 17.12 per cent. The India VIX, a key market volatility indicator, closed the week at 18.22 per cent. The Put-Call Ratio of Open Interest (PCR OI) for the week was 1.56,” remarked Bisht.

FII purchases in Index Puts were Rs5,110.57 crore and sales were Rs4,815.31 crore leaving net buying at Rs295.26 crore. And in index options, foreign funds purchased Rs1.27 lakh crore and sold Rs1.27 lakh crore leaving net sales at Rs31,013 crore.

FIIs in index futures remained net buyers in March and April. They’re net sellers in the previous three months. And coming to the index options, FIIs were net sellers in 2025 so far.

Bank Nifty

Bank Nifty NSE’s banking index closed the week at 55,115.35 points, a modest rebound of 451.30 or 0.82 per cent from the previous week’s closing of 54,664.05 points.