Options data contains a wider trading range

The latest options data on NSE indicates a wider trading range for the coming week (December 6-10, 2021) as the highest Open Interest Base (OI) is at 18,000 EC and 17,000 EP. The resistance level rose 500 points and the support level remained at 17,000 EP for a second week in a row.

According to the latest F&O data, despite the marginal decline in volatility and recovery, put bases are significantly lower than call bases. The highest call option base is near 50 lakh stocks at 17,400 and strike 17500 indicating an obstacle at higher levels. However, the highest selling base is at 17,000 strikes which will serve as immediate support. If Nifty holds above the 17,400 level, the rally may continue. Therefore, Nifty could trade in a wider range of 16800-17400 over the coming week.

Dhirender Singh Bisht, Senior Research Analyst (Derivatives) at SMC Global Securities Ltd, said: “On the derivatives side, callers added large open interest to 17,300 and 17,400 strikes, while callers put added marginal open interest to 17,200 and 17,100 strikes. ”

The strike of 18,000 has a maximum OI appeal base followed by 17,400 / 17,600 / 17,500 / 18,100 / 18,200 / 18,500 strikes. In addition, 17,500 / 18,000 / 18,100 / 17,550 strikes recorded a significant build-up of Call OI. All OTM strikes have seen the addition of Call OI.

On the puts side, the 17,000 hit recorded the highest OI Put, followed by 16,000/17,200/16,500/16,400 hits, while a moderate addition of OI Put is seen at 16,700/16 600/16,400/16,700 keystrokes. The strikes of 17,000 to 17,400 EP recorded a modest unloading of Put OI.

“The bulls maintained their grip on Indian markets during the week. As Nifty broke through the 17,450 mark on short hedging. One-day exponential moving average on the daily charts to end the week below from the 17,200 level. There has been pressure from banks, FMCGs, automobiles and pharmacies, ”Bisht observes.

For the week ended December 3, 2021, BSE Sensex closed at 57,696.46 points, a net gain of 589.31 points or 1.03%, from the previous week’s close of 57,107.15 points. Recording an increase of 170.25 points or 0.99%, NSE Nifty finished the week at 17,196.70 points compared to 17,026.45 points a week ago.

Bisht Forecasts: “For the coming week, we believe markets are likely to move on a volatile path and that selling pressure at higher levels may further keep prices under control as Nifty is trading below. the 17,400 mark. On the downside, any drop below 17,000 Mark will likely add yet another long roll that could also drag the Nifty towards 16,800 levels. ”

According to data from ICICIdirectt.com, leverage positions on index futures have remained declining and despite the recent rally, Nifty futures OI has remained close to 1.1 crore in equities. However, some shift in bias is visible from the FIIs which have become net buyers on both indices and equity futures. Domestic institutions have remained significantly short on index and equity futures, but retailers are net buyers on equity futures.

India VIX was up 2.03 percent to 18.46 as of last Friday. The volatility index at level 18 is still on the rise and suggests caution. From a sector perspective, technology stocks held up.

“Implied call volatility closed at 14.56 percent, while put options closed at 15.19. The Nifty VIX for the week closed at 18.09 percent. OI’s PCR for the week closed at 1.35, “Bisht noted.

In the M&O space, FIIs have focused on the equity futures segment, with short hedging experienced with the market rally. The FIIs sold options on the Rs2.144-cr index and bought up to Rs7.195-cr in equity futures suggesting short hedging. The IFIs also bought index futures contracts worth Rs 1,553 crore.

Smart bank

The NSE banking index closed the week at 36,197.15 points, a marginal recovery of 171.65 points or 0.47%, from the previous week’s close of 36,025.50 points. Despite the underperformance, banking heavyweights have some early signs of hedging and it is worth watching closely.

Throughout the November and early December F&O series, Bank Nifty saw a strong call write, due to which the Put-Call ratio slipped to 0.62. However, it came back last week and moved closer to 0.92 as the call write quantum declined and put option writing started to accelerate, according to ICICIdirect.com. .

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