The significant addition of Call Open Interest (OI) and the modest increase in Put OI maintain an underlying weariness with a bearish bias for the week ahead (November 29-December 3, 2021). The support level fell further 750 points to 17,000 EP and the resistance level eased 400 points to 17,500 CE, according to data from NSE.
The strike of 17,500 has the highest base of appeal, followed by 17,300 / 17,600 / 18,000 / 17,800 strikes. In addition, the 17,500 / 18,100 / 18,000 / 17,800 / 17,400 strikes recorded a significant Call OI. Interestingly, all OTM and ITM strikes saw the addition of the OI appeal. Strong call writing indicates an underlying market decline, derivatives analysts observe.
On the put side, the highest put base is seen at 17,000, followed by 16,500 / 17,200 / 17,100 / 16,800 / 16,500 hits. The 17,100 / 17,000 / 16,800 / 16,700 keystrokes recorded a reasonable build-up in Put OI, while a modest drop in Put OI was observed at 17,500 / 17,400 / 17,600 keystrokes.
Dhirender Singh Bisht, Senior Research Analyst (Derivatives) at SMC Global Securities Ltd, said: “On the derivatives side, the bulls were clearly seen at the back as the marginal sell entry was seen at 17,000 strikes. On the other hand, the callers added a big Open Interest to 17,300 and 17,400 strikes. ”
Put writers were struggling to hold their positions due to increased volatility and steep declines. If Nifty breaks above the 17,000 level, it could trigger declines to 16,700 in the next few sessions. On the high side, durability above 17,500 would be crucial for a new upward bias, according to ICICIdirect.com.
“Indian markets have witnessed a bloodbath over the past week, following massive sales by foreign investors amid renewed concerns about new variants of Covid,” Bisht added.
For the week ended November 18, 2021, BSE Sensex closed at 57,107.15 points, a net gain of 2,528.86 points or 4.24%, compared to the previous week’s close of 59,636.01 points . Recording an increase of 738.35 points or 4.15%, NSE Nifty finished the week at 17,026.45 points against 17,764.80 points a week ago.
Bisht Forecasts: “For the coming week, we maintain our bearish position in Indian markets and advise traders to remain cautious. From a technical standpoint, Nifty has broken its exponential 100-day moving average on the daily charts. , which was placed at 17,150 levels. ”
The November futures and options (F&O) series suffered a sharp drop in Nifty as it plunged to 17,536 levels. Series after series, Nifty closed with a loss of around four percent and Bank Nifty suffered a heavy loss of seven percent.
The astute reversal of the December series was 82.57 percent from the previous 82.31 percent and the three-month average of 80.42 percent.
During the November series, Nifty added five percent OI and started the December series on a lighter note with 6.68 lakhs of shares in OI. With the unwinding in open interest, this indicates that some of the long positions in Nifty were not carried over.
The Nifty indices started the December series with a negative impression and fell below the 17,000 mark as a strong correction was seen among heavyweight names like Reliance Industries, the HDFC twins as well as metal and the automotive space, ”Bisht said.
According to sharekhan.com, for the November series, the OTM 17,000 exercise put option was the highest in open interest rate with 82,099 contracts, followed by 17,500 PE with 54,277 contracts. On the call side, the 18,000 CE is the highest in terms of open interest with 46,519 contracts followed by the 19,000 strike with 38,026 contracts.
“Implied call volatility closed at 13.40 percent, while put options closed at 14.80 percent. The Nifty VIX for the week closed at 16.66 percent and is expected to remain volatile. The OI PCR for the week closed at 1.3, Bisht noted.
The NSE banking index closed the week at 36,025.50 points, a net loss of 1,950.75 points or 5.13%, compared to the previous week’s close of 37,976.25 points. Bank Nifty recorded a 2% increase in OI with a drop in price indicating a short build observed in the index. Bank Nifty posted a turnover of 83.76% versus 80.37% the previous month and the three-month average of 80.98% with a turnover cost of 170 points. We believe that with high turnover Bank Nifty saw a short shift to the next round.