Options data holds limited upward move

The highest Call base remained at 19,000CE for a third consecutive week, while support level moved up by 300 points to 18,300PE, as per the latest data available on NSE after Friday trading session. Call writers added heavily at 18,400CE, while the 19,000CE witnessed offloading of OI. Despite major drop in OI, the highest Call OI is seen at 19,000CE followed by 19,500/ 18,500/ 18,900/18,600/ 19,300/18,700/18,650 strikes, while 18,900/18,500/18,600/ 18,650/ 18,800/ 19,300 strikes witnessed significant build-up of Call OI.

Coming to the Put side, the maximum Put base is at 18,300PE followed by 18,000/17,700/17,600/ 18,400/18,200/18,100/ 17,900 strikes. Further, 18,300/18,200/18,100/ 17,900/18,000 strikes recorded reasonable addition of Put OI.

The 18,950-19,050 range witnessed declining Call OI. The continued pressure at higher levels during the week and the weakness on Friday may have prompted such high short Call OI.

Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "On derivatives front, Put writers' added marginal Open Interest at 18,300 strike, while Call writers hold maximum Open Interest at 18,400 strike."

"Nifty took a pause last week after four weeks of consecutive gains as selling pressure was observed at higher levels on the back of profit booking. Bank Nifty, however, still managed to close higher in the week, with gains of nearly one per cent as ICICI Bank, HDFC twins along with Kotak Bank gave some support to the banking index," added Bisht.

BSE Sensex closed the week ended November 18, 2022, at 61,663.48 points, a marginal decline of 131.56 points or 0.21 per cent, from the previous week's closing of 61,795.04 points. NSE Nifty ended the week at 18,307.65 points, edged down by 42.05 points or 0.23 per cent, from 18,349.70 points a week ago.

Bisht forecasts: "Technically, both the indices are maintaining their uptrend on the charts and expected to remain buoyant in upcoming sessions as well. We expect Nifty to continue its journey towards north once 18,400 levels get breached decisively on a higher side."

India VIX declined 3.28% to 14.39 level. The continued drop in IV has prompted Options sellers to move to ATM strikes. For the first time in the last few weeks, a significant Call base is formed compared to Put options bases with 18,400 Call strike holding more than one crore shares.

"Implied Volatility (IV) of Calls closed at 13.15 per cent, while that for Put option, it closed at 14.18 per cent. The Nifty VIX for the week closed at 14.88 per cent. PCR of OI for the week closed at 0.88. Volatility was also observed during the week as tug of war among bulls and bears kept Indian markets on a shaky ground.

The VWAP for November F&O series is hovering at 18200 level, which is likely to act as immediate support. Analysts forecast a fresh upward move. Also, considering the F&O settlement week ahead, the market may witness short covering and move higher. A further leg in the recovery may be seen if the Nifty moves above 18,400 level once again, which should take markets towards fresh highs.

Bank Nifty

NSE's banking index closed the week at 42,437.45 points, a further recovery of 300.04 points or 0.71 per cent, from the previous week's closing of 42,137.05 points.

On the Options front, positions are placed in both OTM Calls and Puts, which suggest a broader consolidation. However, Bank Nifty is heading towards 43000 on upsides whereas major support for the index should be placed at 41,500 where for the past few weeks Put writing activity has been rising.

The current outperformance in banking stocks would continue. Due to lower OI base, cash-based buying increased, which should keep the momentum intact. The current price ratio of Bank Nifty-Nifty should head towards 2.34 in coming weeks.