F&O data holds rise in support, resistance levels

After remaining at 18,000CE for six weeks, the resistance level moved up by 1,000 points to 19,000CE, while the support level rose 500 points to 18,000PE. During the previous week, the resistance level became the support level. The latest options data on NSE indicates positive movement for the week ahead (Jan 17-21, 2022). Call and Put bases remain highest at 18200 strike, above which NSE Nifty closed. This is suggesting some consolidation in the index. Consolidation can't be ruled out after a sharp up move of over 900 points in January. At the same time, considering ongoing momentum in midcap and small cap, analysts expect the stock-specific focus ahead of the Union Budget.

The highest Call OI is seen at 19,000 strike followed by 18,800/ 18,300/18,700/18,400 strikes. Further, 19,000/18,200/18,800/18,400/18,650 strikes recorded hefty build-up of Call OI.

Coming to the Put side, the 18,200 strike witnessed maximum Put OI base followed by 18,000/ 17,900/18,100/17,800/ 17,700 strikes. Other strikes 18,200/18,000/ 17,900/ 18,100/18,150 too attracted significant addition of Put OI.

Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "From derivatives front, Call and Put writers remained active at 18,200 strike, while 18,000 strike had maximum Open Interest concentration of nearly 46 lakh shares in Puts."

According to ICICIdirect.com, despite the sharp move, the OI in the Nifty remained subdued near one crore shares and only FIIs segment is net long in index futures. Further addition is crucial for a fresh move in the index. Meanwhile, considering significant positions by retail and proprietary clients, stock-specific movement is likely to continue.

"Nifty index ended in green territory for the fourth consecutive week as banking, IT & reality counters supported the up move in the week gone by," added Bisht.

For the week ended January 14, 2022, BSE Sensex closed at 61,223.03 points, a net gain of 1,478.38 points or 2.47 per cent, from the previous week's closing of 59,744.65 points. Registering a rise of 443.05 points or 2.48 per cent, NSE Nifty ended the week at 18,255.75 points from 17,812.70 points a week ago.

Bisht forecasts: "From technical front, Nifty can be seen trading in a rising channel with formation of higher high pattern and is expected to continue its momentum towards 18,500 level in upcoming sessions. On the downside, 18100 & 18000 levels would act as an immediate support for the index. We keep our bullish stance intact for Indian markets and advice traders to use any dip to create fresh long positions."

India VIX eased 0.90 per cent to 16.56 level. On the volatility front, India VIX has not subsided below 16 level despite the up move and closed the week near 16.5. Ahead of the Union Budget, volatility would continue to remain higher, but positive bias would prevail until the volatility remains below 18 per cent level.

"Implied Volatility of Calls closed at 16.61 per cent, while that for Put options closed at 17.85 per cent. The Nifty VIX for the week closed at 16.71 per cent. PCR of OI for the week closed at 1.67," remarked Bisht.

After the initial rise in volatility, no major upsides were seen in the volatility index whereas FIIs selling quantum also declined significantly compared to December.

In the F&O space, FII activity concentrated on the index options segment. With the Nifty recovering significantly, FIIs remained cautious. As per the data from ICICIdirect.com, FIIs were net buyers in index options worth Rs1,938crore and sold to the tune of Rs650 crore in stock futures.

Bank Nifty

NSE's banking index closed the week at 38,370.40 points, a marginal recovery of 630.80 points or 1.67 per cent, from the previous week's closing of 37,739.60 points. For Bank Nifty, sizable OI is seen at ATM Straddle of 38500 and it indicates some consolidation near this level. However, support for the index remains at 38000, which is the highest Put base. With this support, the index should head towards 40,000 level on upsides.

Quarterly results by banking heavyweights are lined up in coming days, which should trigger stock-specific actions, but looking at the overall closures in Call writing positions, the Bank Nifty should test 40000 levels on upsides. For the January series, Bank Nifty witnessed closers in futures and the current leg of short covering may continue.