Consolidation likely with marginal positive bias

The highest Open Interest (OI) is seen at 11,500CE and 11,000PE after the trading hours on last Friday (August 7). The NSE Nifty recovered from the crucial level of 10,800 and is expected to consolidate more above 11,000 for the week ahead (August 10-14). From the Monetary policy, the markets were expecting fresh triggers. The domestic stock markets consolidated around 11,200 in the first week of the August derivatives series as both FIIs and DIIs remained on the sidelines. If global markets continue to trade with a positive bias, similar reactions would be seen in Indian markets as well.

Dhirender Singh Bisht, senior research analyst (derivatives), SMC Global Securities Ltd, said: "From derivatives front, short covering was witnessed by Call writers at 11,000 strike, while Put writers added nearly hefty Open Interest at the same strike."

The 11,500 strike, which also recorded maximum Call OI addition of 12.37 lakh contracts, has highest Call OI of 23.30 lakh contracts followed by 11,300 strike, which witnessed Call OI addition of 11.28 lakh contracts, with 21.83 lakh contracts,11200 strike with 18.86 lakh contracts and 11600 strike with 11.16 lakh contracts.

Coming to Put side, 11000 strike, which added Put OI of 11.34 lakh contracts, has highest Put OI of 26.97 lakh contracts followed by 11100 strike with 20.44 lakh contracts and 10,500 strike, which recorded highest Put OI of 11.93 lakh contracts, with 19.98 lakh contracts.

Bisht adds: "After witnessing a pull back towards 11,000 level, Nifty witnessed a sharp recovery from lower levels and once again reclaimed 11,200 level last week on back of sharp short covering. Rally was supported by heavyweights like HDFC Bank and Reliance Industries along with metal counter." BSE Sensex closed at 38,040.57, a net gain of 433.68 points or 1.15 per cent, from the previous close of 37,606.89 points. Similarly, NSE Nifty too moved up by 140.6 points or 1.26 percent, and closed the week at 11,214.05 points as against last week's 11,073.45 level.

"From technical front, still Nifty is trading well above its short and long term moving averages, while Bank Nifty would face strong hurdle at 21,950 to 22,000 zone. In coming sessions, we believe that volatility will likely to grip the markets and bias would remain bullish as far Nifty is trading above 11,000 levels. On higher side a break above 11,250 levels would once again add follow up buying into the index, so any dip into the prices should consider as buying opportunity," forecasts Bisht.

In the F&O space, the trading activity was relatively sluggish on the FII front as they offloaded Rs1,391 crore in index futures and also sold to the tune of Rs2,654 crore in the stock futures segment during the week. However, FIIs bought Rs2,895 crore in index options, according to data from ICICI Direct.com.

Global indices also continued their positive momentum as US markets are inching towards their life-time highs seen in February this year. The Dollar Index has breached its major support at 95 levels. It is currently hovering around 93. A round of reversal from these levels is expected in the dollar index.

India VIX declined by 6.7 per cent to 22.58 level. "The Implied Volatility of Calls closed at 17.04 per cent, while that for Put options closed at 21.75 per cent. The Nifty VIX for the week closed at 22.57 per cent and is expected to remain sideways. PCR OI for the week closed at 1.22. In stock futures on weekly basis there is a short covering seen in Tata Consumer, Chola Finance, Torrent Pharma and Bajaj Finance whereas a long build up seen in RBL bank, Sail, Apollo Tyres and Tata Motors. Next week, the stock should be on radar is Bandhan Bank where highest Open Interest addition seen in last seek. If the stock sustain at the current level then we can expect a relief rally in the stock," remarked Bisht.

Bank Nifty

Recovering by 113.95 points or 0.52 per cent for the week, Bank Nifty closed at 21,754 points as against previous week's closing of 21,640.05 points. Bank Nifty continued to trade in a range where concentration of OTM Call writers and Put writers was more as 21,000 acted as support and 22,000 acted as a hurdle. The August futures and options (F&O) series had started with higher premiums, but as the series was progressing, premiums declined on the back of short formation at 22,000. This could be a positive trigger as for past few weeks, major rally was seen on the back of short covering.

As per ICICI Direct.com, major Call OI short formation level was at 22,000. Analysts forecast a close above these levels would open the gates for higher target of 23,000. However, the Bank Nifty witnessed major support near 21,000 for three times recently. Hence, analysts expect that this would provide a

cushion.