Derivatives Outlook Bullish undercurrent amid rising OI

The 24,000CE has highest Call OI followed by 23,500/ 24,500/ 23,000/23,100/ 23,200/ 23,300/ 23,400/ 23,600/ 23,700, while 23,000/23,500/ 23,100/ 24,000/ 24,500 strikes recorded robust build-up of Call OI. Deep ITM strikes from 22,900 onwards suffered marginal Call OI fall.

Coming to the Put side, maximum Put OI is seen at 23,000PE followed by 22,500/21,500/ 22,000/ 20,050/ 20,500/ 21,800/ 22,200/ 22,300/ 22,400 strikes.

Further, 23,000/22,900/ 20,050/ 21,900 strikes witnessed reasonable addition of Put OI. Modest fall in Put OI is visible at deep OTM strikes.

Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “In the derivatives market, Nifty options showed the highest Call Open Interest at the 23,500 and 23,000 strikes, while the highest Put Open Interest was observed at the 23,000 and 22,500 strikes. In the upcoming session, the 23,000 level will play a crucial role as both Call and Put writers are active at this level and also it is a significant psychological level.”

Due to sharp recovery in weekly expiry on last Thursday, aggressive Put writing took place from 22,200 strike to 22,400 strike. Call option base is at deep OTM 23,000. It’s expected that Nifty may hold above these levels. Nifty moved to 23,000 points on the back of further short covering ahead of election results. On downside, the support level is at 22,200 for Nifty.

“Last week, NSE Nifty index touched a record high and closed with a weekly gain of over two per cent, while Bank Nifty rose by more than 1.5 per cent. Major gainers were media, metal and PSE stocks, whereas small-cap and healthcare stocks demonstrated profit booking,” added Bisht.

BSE Sensex closed the week ended May 24, 2024, at 75,410.39 points, a net gain of 1,404.45 points or 1.89 per cent, from the previous week’s (May 18) closing of 74,005.94 points. For the week, NSE Nifty also moved up by 455.10 points or 2.02 per cent to 22,957.10 points from 22,502 points a week ago.

Bisht forecasts: “It is expected that bullish momentum is likely to carry in upcoming sessions as well and traders should use dips to create fresh longs as far Nifty holds above 22,700 level.”