Volatile trading with negative bias likely
Call writers hold most of OI at higher strikes at 17300/ 17400/ 17500 strikes, while Put writers adding marginal OI at 17200 & 17000 strikes
As per the options data on NSE, the resistance level remained at 18,000CE for the second consecutive week, while support level declined by 500 points to 16,500PE; A close above 17400 level may trigger a round of short covering towards 17800 points.
The 18,000CE has highest Call OI followed by 17,500/17,300 /17,900/ 17,200/ 17,800 strikes, while 17,500/ 18,000/ 17,300/ 17,400/ 17,450/ 17,900 strikes.
Coming to the Put side, 16,500PE strike has maximum Put OI followed by 17,000/ 17,200/ 16,800/ 16,600/ 17,100 strikes. Further, 17,200/17,300/ 16,700/ 16,600/ 16,500/ 17,250 strikes witnessed reasonable addition of Put OI.
Major OI base is seen at Call 17500 and Put 17000 strike for the week ahead. However, considering significant Call writing at ATM strikes, even a move above 17400 may trigger a round of short covering in the market. However, fresh positive bias is forecast above 17400, while 17000 remains an important support.
Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "From the derivatives front, a lot of Open Interest was seen added by Call writers at higher strikes. 17300, 17400, & 17500 strikes hold most of the Open Interest in Calls, while Put writers were seen adding marginal Open Interest at 17200 & 17000 strike comparatively. For upcoming sessions, we expect markets to remain volatile and likely to trade with negative bias in a broader range of 1740017000."
According to ICICIdirect.com, continued range bound move and weak global markets had triggered fresh shorts from FIIs as their net short positions remained elevated near 1.15 lakh contracts. On the other hand, retail positions increased sharply and they hold the highest ever net longs in index Futures. A close above 17400 level may trigger a round of short covering towards 17800 points.
"Indian markets remained highly volatile in the week gone by as NSE Nifty was seen taking a roller coaster ride in a broader range of 16,950 to17,350, while Bank Nifty also traded in a broader range of 38450 to 39550 levels. As the result season has started, support is seen in Nifty IT index whereas profit booking was seen in most of the sectors," adds Bisht.
BSE Sensex closed the week ended October 14, 2022, at 57,919.97 points, a net loss of 271.32 points or 0.46 per cent, from the previous week's closing of 58,191.29 points.
Registering a modest fall of 128.95 points or 0.74 per cent, NSE Nifty ended the week at 17,185.70 points from 17,314.65 points a week ago.
India VIX fell 10.02 per cent to 18.26 level. Implied Volatility (IV) fell to its lowest level since mid-September as the Nifty has shown significant resilience against global cues. Amid result season, focus may remain among heavyweights and sectors like technology and pharma may outperform amid short covering ahead of their quarterly results, according to ICICIdirect.com.
"Most of the volatile moves were seen on the back of global factors. Implied Volatility (IV) of Calls closed at 19.34 per cent, while that for Put option, it closed at 20.37 per cent. The Nifty VIX for the week closed at 20.29 per cent. PCR of OI for the week closed at 1.73," remarked Bisht.
Bank Nifty
NSE's banking index closed the week at 39,305.60 points, a net gain of 127.55 points or 0.32 per cent, from the previous week's closing of 39,178.05 points.
