OI bases building up at Call strikes amid rising volatility

The 23,500CE has highest Call OI followed by 23,000/ 22,600/ 22,900/ 23,200/ 23,100/ 23,400/ 22,850/ 23,100, while 23,000/ 23,200/ 23,500/ 23,200/ 23,300/ 22,700/ 22,800/ 22,550 strikes recorded hefty build-up of Call OI. OI addition is seen on all Call strikes.

Coming to the Put side, maximum Put OI is seen at 21,500PE followed by 22,000/ 21,800/ 21,000/ 21,900/ 21,200/ 21,650/ 22,100 strikes. Further, 21,800/ 22,000/ 22,100/ 22,200 strikes witnessed reasonable addition of Put OI.

Fall in Put OI visible at deep OTM strikes from 21,500PE and ITM range of 22,500-22,750.

Dhirender Singh Bisht, associate vice-president (technical research) at SMC Global Securities Ltd, said: “Analysing Nifty’s derivatives data, highest Call writing is seen at the 22,500 and 22,600 strikes. Conversely, Put writers displayed activity, particularly at the 22,500 and 22,000 strikes. In Bank Nifty, the highest Call Open Interest was observed at the 48,500 and 49,000 strikes, while on the Put side, it was concentrated at the 48,000 and 47,000 strikes.”

The Friday recovery indicated an aggressive Put writing at 21,800 strike, which holds the highest OI base for the monthly settlement. Hence, Nifty may hold itself above this level and is likely to go higher to its VWAP levels. It’s better to avoid longs if the index moves below 22,000 level.

“Nifty and Bank Nifty are currently consolidating near their record highs, with both indices registering weekly gains of over one per cent. Last week, PSU banks, real estate and small-cap stocks stood out as top performers, while IT, financial services, and private banks were laggards,” added Bisht.

BSE Sensex closed the week ended April 26, 2024, at 73,730.16 points, a net gain of 641.83 points or 0.87 per cent, from the previous week’s (April 19) closing of 73,088.33 points. For the week, NSE Nifty also moved up by 272.95 points or 1.23 per cent to 22,419.95 points from 22,147 points a week ago.

Bisht forecasts: “Consequently, we anticipate sluggish movements in both indices until a trigger emerges. The market trend will be determined by how positions are formed throughout the month. In the upcoming week, Nifty may test upside resistance at 22,600pts, whereas downside support is placed at 22,200 points.”

The volatility index India VIX moved up by 16 per cent last week to 10.93 level.