Options data pointing to weakening Call OI bases

The options data on NSE after the last Friday session points to narrowing trading range for the week ahead (September 4-8, 2023) as the resistance level rose marginally by 100 points to 19,600CE and the support level increased by 500 points to 19,500PE.

The 19,600CE has highest Call OI followed by 19,500/ 19,700/ 19,400/ 20,000/19,800/ 19,900 strikes, while 19,600/ 19,500/19,750/ 19,450 strikes recorded reasonable addition of Call OI.

Coming to the Put side, maximum Put OI is seen at 19,300PE followed by 19,400/ 19,200/ 19,000/ 18,500/18,900 / 18,950 strikes. Further, 19,300/ 19,350/ 19,400/ 19,250/ 18,950/ 18,750 strikes witnessed moderate to heavy build-up of Put OI.

Dhirender Singh Bisht, associate vice-president (technical research-equity) at SMC Global Securities Ltd, said: “In the analysis of derivatives data for Nifty, there was visible Put writing in 19,300 strike, where the highest Put Open Interest was recorded at 19,300 followed by 19,400 strike. Conversely, Call writers seemed less active in Nifty, with the highest Open Interest at 19,600 strike followed by 19,500 points.”

“On the weekly chart, both the Nifty and Bank Nifty indices concluded with marginal gains. Nifty closed in green after 5 consecutive losses on weekly chart. Buying interest was seen in metal stocks followed by auto and consumer durable stocks last week. Conversely, there was a trend of profit-taking in oil & gas, FMCG and pharmaceutical stocks,” added Bisht.

BSE Sensex closed the week ended September 1, 2023, at 65,387.16 points, a net recovery of 500.65 points or 0.77 per cent, from the previous week’s (August 25) closing of 64,886.51 points. During the week, NSE Nifty too marginally rebounded by 169.50 points or 0.87 per cent to 19,435.30 points from 19,265.80 points a week ago.

Bisht forecasts: “Looking forward to the upcoming week, it is anticipated that Nifty’s trading range will be between the level of 19,200 and 19,600 points. Stock-specific buying can be expected ahead. Buy on dips is recommended until Nifty trades above 19200 level.”

Nifty rollover to September F&O series was 77.97 per cent from 83.95 per cent in August and three-month average of 76.87 per cent.

Considering the rollover cost of 160.45 points with declining OI, it indicates long unwinding in Nifty. NSE Nifty closed August F&O series with a net loss of 2.07 per cent and Bank Nifty too ended in loss of 3.70 per cent. Nifty recorded 20 per cent OI loss.

India VIX fell 5.78 per cent to 11.36 level. “Moving to Implied Volatility (IV), Call options for Nifty settled at 10.42 per cent, while Put options concluded at 10.89 per cent. The Nifty VIX, a measure of market volatility, concluded the week at 12.06 per cent. The Put-Call Ratio of Open Interest, standing at 1.44 for the week, indicated a higher inclination towards Put writing over Calls,” observed Bisht.

“Traders are advised to monitor the India VIX closely, as it is trading near to the support level. A rebound in India VIX could be expected in the coming weeks,” said Bisht.