Options data indicates uncertainty

Resistance and support levels, according to options data on NSE, were unchanged for a second week at 16,800 CE and 16,400 PE respectively. The F&O August series recorded continuous writing among the Put strikes. Despite the sharp declines seen on Friday, the Open Interest (OI) put option remained almost intact throughout the strikes with the highest selling base at 16,400 strikes.

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

On the Put side, the 16,400 strikes recorded the maximum OI Put followed by 16,300 / 16,500 / 16,000 / 16,200 strikes. A significant addition of Put OI was observed at 16,400 / 16,500 / 15,800 / 16,300 strokes.

The strike of 16,500 has a maximum Call OI followed by 16,700 / 17,000 / 16,400 strikes. Additionally, 16,500 / 17,100 / 16,400 / 16,800 / witnessed a reasonable addition of the OI call. On the Put side, the 15,500 PE has the highest OI Put, followed by 16,000/16,400/16,500/15,800 strikes. A moderate accumulation of Put OI was observed at 15,500/16,400/15,400 strokes.

Dhirender Singh Bisht, Senior Research Analyst (Derivatives) at SMC Global Securities Ltd, said: “On the derivatives side, puters were seen unwinding their positions at 16,500 strikes, while callers added a large open interest at the same level. ”

Any change in the bias for the expiration week should only be considered if the Nifty goes below the 16,400 level on a closing basis, according to ICICI Direct.com. Open interest in Nifty has reached its highest levels since March 2020. In current weakness, it has declined slightly due to a long sell-off. However, the net long positions of the IFIs remained intact and closing the positions of the IFIs could put additional pressure on the index, added ICICI Direct.com.

“Indian markets have remained volatile over the past week due to mixed indications from the global front. Continued weakness in global markets has kept bears in the limelight even as Nifty tested its record highs last week . ”

For the week ended August 20, 2021, BSE Sensex closed at 55,329.32 points, a net loss of 107.97 points or 0.19%, from the previous week’s close of 55,437.29 points. Recording an encouraging gain of 78.60 points or 0.47%, NSE Nifty finished the week at 16,450.50 points against 16,529.10 points a week ago.

Bisht Forecast: “Technically, we are seeing negative divergences on the secondary oscillators of both indices, indicating a limited rise in the index for the coming week. On the downside, the 16400 and 16250 levels will act as immediate support. for Nifty, while any sharp rise would likely remain capped below the 16600-16650 area. ”

The volatility index once again did not exceed 14 percent. Over the past two months, despite many attempts, India VIX has remained below this level. While weakness was also seen in the broader markets earlier, the Nifty has shown significant resistance.

The India VIX volatility index gained 8.60 percent to 14.02. “However, volatility is expected to remain intact in the markets with sector specific action,” observes Bisht. If India VIX holds above the 14 level, it could trigger some weakness in the NSE Nifty in the coming sessions. “Implied call volatility closed at 11.01 percent, while put options closed at 12.03 percent. The Nifty VIX for the week closed at 12.91 percent. ‘OI for the week closed at 1.34, “Bisht noted. In the F&O space, FII has remained focused in the space of equity futures and index options. With the Nifty trading near lifetime highs, FII activity sharply increased stock futures contracts by Rs 4,283 crore as they were net sellers of index futures. Worth Rs 202 crore. At the same time, the FII bought index options worth Rs6.557 crore during the week.

Smart bank

The NSE banking index closed the week at 35,033.85 points, a decrease of 1,135.50 points or 3.13%, from the previous week’s close of 36,169.35 points. “The banking index once again failed to hold above the 36,000 level and fell sharply to end the week with a loss of nearly 3%,” Bisht added. The Bank Nifty drew huge call writes with 35,500 strikes followed by 36,000 points. Even if the index finds support near 35,000 and suffers a pullback, no visible gain can be sustained during the expiration week. The major obstacle for the index remains at the 36,000 level. Bank Nifty-Nifty’s price ratio broke its support of 2.18 and fell well below that level. This is likely to keep bank stocks under pressure.

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