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Options data holds broad-range consolidation

Options data holds broad-range consolidation
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Options data holds broad-range consolidation 

Highlights

A close above 32,000 strike may trigger a 1000-point rally in Bank Nifty

As per the latest options data from NSE, the support level for the broad-based Nifty remained at 14,000 strike, while resistance level declined by 500 points to 15,000 strike.

The highest call OI is at 15,000CE followed by 15,500/ 14,700/14,800/15,100/15,300 strikes. 14,800/ 15,300/ 15,500/ 14,900/ 15,000 strikes recorded reasonable addition of Call OI. Coming to the Put side, the highest put OI is at 14,000PE followed by 13,500/ 13,000/ 14,500/ 14,400/ 14,600 strikes.Strikes 14,600 /14,500/ 13,800/13,50012,800 recorded significant Put OI build-up.

According to the data from ICICI Direct.com, the NSE Nifty has major call base placed at 14,700 strike with highest Call base placed at 15,000 strike for the weekly settlement. On the downside, the 14,500 remains a crucial support due to continued build-up seen in this strike. Analysts predict any move above 14,700 strike may trigger upside momentum towards 15,000 in the April series.

Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "From the derivatives front, Call writers were seen adding hefty Open Interest at 14700-14800 & 15000 strikes, which could limit any sharp upside into the index. On the downside, put writers added marginal open interest at 14,600 and 14,500 strikes, which could act as support levels for the Nifty on a short-term basis."

For the week ended April 16, 2021, BSE Sensex closed at 48,832.03 points, a net fall of 759.29 points or 1.53 per cent, as against 49,591.32 points. NSE Nifty further declined by 217 points or 1.46 per cent and closed at 14,617.85 points from 14,834.85 points.

"Indian markets once again saw trading in range bound manner as tug of war between bulls and bears kept Nifty indices in the range of 14,250-14,700 during the week. Technical oscillators suggest that the market is likely to remain volatile in the upcoming week as well with some consolation moves in the broader range of 14750-14350 zone. Traders should keep stock-specific action onto radar on the back of ongoing result season," forecasts Bisht.

The BFSI space did well in the last few weeks and some short covering was experienced. The banking sector may take the lead from here onwards. It will be crucial for a market recovery towards 15,000 level for the NSE Nifty. Moreover, analysts expect some consolidation in the technology space post their quarterly results.

The volatility on the bourses eased sharply towards 20 levels once again after testing 23 levels on Monday. Volatility may remain subdued, which should bode well for the current recovery. "The Implied Volatility of Calls closed at 19.76 per cent, while that for Put options closed at 20.48 per cent. The Nifty VIX for the week closed at 20.89 per cent. Put-call ratio of OI for the week closed at 1.35 and it indicates more Put writing than Calls," remarked Bisht.For the week, FIIs sold Rs1,006 crore, while domestic institutions (DIIs) remained on the side-lines as they sold just Rs51 crore.

In the F&O space, FII action was primarily seen in the stock futures and index options segment. FIIs were net buyers in the index futures segment worth Rs925 crore and sold to the tune of Rs565 crore in the stock futures. Further, FIIs bought index options worth Rs9,123 crore.

Bank Nifty

The NSE's banking index Bank Nifty closed at 31,977.45 points, a net loss of 470.60 points or 1.45 per cent from 32,448.05 points.

The banking space recorded some short covering and recovered from the lows near the 30,500 strike. In the last two sessions, fresh long OI build-up is seen as Bank Nifty closed near its sizable Call base of 32,000 points. Derivatives analysts forecast some recovery in the Bank Nifty at the current juncture and stocks like HDFC Bank, Kotak Mahindra Bank are expected to do well from current levels. Supportive action is expected from mid-cap banks like Federal Bank and Bandhan Bank.

On the options front, a sizable Call OI base is placed at 32,000 strike followed by 33,000 strike. Further downside move is limited as recent lows should provide cushion. In contrast, a close above 32,000 strike again should trigger a 1000-point rally for the Bank Nifty.

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