Options data holds positive bias with minor pause

Indicating the undercurrent buoyancy in the market, the support level moved up by 900 points to 16,800CE and resistance level shifted higher by 500 points to /16,400PE making room for wider trading range.

The 16,800 strike has the highest Call OI base followed by 17,000/16,500/ 16,600/ 16,900 strikes. Further, 16,800/17,000/ 16,600 strikes witnessed reasonable build-up of Call OI.

Coming to Put side, the 16,400 strikes recorded maximum Put OI followed by 16,300/ 16,500/ 16,000/16,200 strikes. Significant addition of Put OI was seen at 16,400/ 16,500/ 15,800/ 16,300 strikes.

Dhirender Singh Bisht, senior research analyst (derivatives) at SMC Global Securities Ltd, said: "From derivatives front, once again Call unwinding was observed at 16,500 strike along with Put writing. Put writers were seen shifting to higher bands, which clearly indicates strength in current trend."

The NSE Nifty continued its upward trajectory and tested 16,500 points. Heavyweights from the technology space helped the Nifty move higher. However, some profit taking was seen in the broader markets where midcap and small cap indices closed the week negative and shed more than one per cent each.

As per the data from ICICI Direct.com, the continued writing was seen among Put strikes throughout the August series as the NSE Nifty breached its prevailing range of 15,600-15,900. In such a scenario, positive bias should continue till it holds its major Put base. For the week ahead (August 16-20), the highest Put base at the 16,400 strike should act as immediate support on any decline. An extended profit booking towards 16,000 can be expected only below these levels.

Bisht further adds: "Both Nifty and Sensex ended the week at record levels led by the gains in energy, IT and banking stocks. TCS, Infosys, HCLTECH, BhartiAirtel and Wipro inched to their 52- week highs, while Tata Steel from metal counter added gains in the latter half of the sessions."

For the week ended August 13, 2021, BSE Sensex closed at 55,437.29 points, a net gain of 1,159.57 points or 2.13 per cent, from the previous week's closing of 54,277.72 points. Registering an encouraging gain of 290.90 points or 1.79 per cent, NSE Nifty ended the week at 16,529.10 points from 16,238.20 points a week ago.

The current volumes of Open Interest (OI) in the NSE Nifty are the highest levels since March 2020. In the current August F&O series, the OI increased almost 50 per cent since inception. Hence, the positive bias remained in the index till there's no closure of positions in the coming sessions. Derivatives analysts forecast that on the higher side, the Nifty may move towards 16,800 in coming sessions.

"Technically markets are consistently maintaining its uptrend ever since the fresh breakout was observed above the key psychological level of 16,000 points. For the upcoming week, we believe that bulls will continue to keep control over Indian markets as a lot of buying interest is seen in the week gone by," forecasts Bisht.

The volatility index India VIX moved above 13 per cent level despite continued up move and closed the week at 12.99 level, which is an indicator of closure among Call writers. Hence, the momentum may continue in the short-term. In such a scenario, trading long should be kept with stop loss near 16,400 level, observe analysts.

"The Implied Volatility of Calls closed at 10.48 per cent, while that for Put options closed at 11.13 per cent. The Nifty VIX for the week closed at 12.37 per cent. PCR of OI for the week closed at 1.80."

Bank Nifty

NSE's banking index closed the week at 36,169.35 points, a net recovery of 360.10 points or one per cent, from the previous week's closing of 35,809.25 points.

"Banking index, however, faces strong hurdles in the zone of 36,200-36,400 points, above which it could lead the markets and move towards the 37,000 level as well," remarked Bisht.

According to ICICI Direct.com, the current price ratio of Bank Nifty-Nifty took support near 2.18 level on the back of outperformance in banking stocks. The price ratio of Bank Nifty-Nifty should move towards 2.24 level in the coming days. A sharp up move is expected in the banking index once it manages to move above 36,500 points.