Except for a few strikes, most of the OTM and ITM strikes witnessed a drop in OI from the Call and Put sides. On the Put side, OTM strikes saw a moderate to medium Put OI addition. Diluting open interest (OI) bases point to a loss of rally strength and uncertainty among investors, derivatives analysts observe. According to the options data on NSE, the support level has decreased by 1000 points at 17,500 PE, while the resistance level has slightly decreased by 100 points at 17,40 CE.
The 17,500 strike has the highest Call OI followed by 18,000/ 17,650/ 18,150/ 17,700/ 17,500 strikes. 17,500 CE recorded a peak accumulation of OI call followed by 17,500, while the 17,600-18,900 strike range witnessed a moderate to medium unloading of OI call.
On the Put side, 17,400 and 17,450 strikes recorded the maximum Put OI base followed by 17,000/17,300/17,100/17,500 strikes. 17,450PE has a reasonable accumulation of Put OI, while the ITM and OTM strike saw lower Put OI volumes.
Dhirender Singh Bisht, Senior Research Analyst (Derivatives) at SMC Global Securities Ltd, said: “On the derivatives side, call writers were seen at 17600 and 17700 strikes and that kept the markets under pressure and Nifty a ended below 17,500.”
Analysts at ICICIdirect.com believe that current levels near 17400-17500 should be crucial for the index as the range holds the main selling base for weekly and monthly settlements. In addition, open interest in index futures is relatively low and the high basis prevailing in index futures is normalized again. Additionally, despite the recent heavy sell-offs, the Volatility Index is still hovering below 18 and looks like there should be limited downside from current levels.
The main option bases are the Put 17500 and Call 17700 strikes. Durability beyond these levels may trigger a further directional move in the index. Therefore, limited to positive movement is likely in the index over the coming sessions, according to ICICIdirect.com.
Tech heavyweights have witnessed a huge number of call writes during ATM strikes, which can limit benefits. However, the banking space may continue to outperform and provide support in a prolonged decline.
“Once again, Indian markets have remained volatile over the past week and stabilized slightly lower as traders remained on the sidelines over the long weekend,” Bisht adds.
For the week ended April 13, 2022, BSE Sensex closed at 58,333.93 points, a further decline of 1,113.25 points or 1.87%, from the previous week’s close of 59,447.18 points . Registering a continuous decline of 308.70 points or 1.73%, NSE Nifty ended the week at 17,475.65 points against 17,784.35 points a week ago.
Bisht predicts: “Technically, both indices are still holding well above their long-term moving averages on the daily charts. However, the secondary oscillators suggest further price consolidation at the current stage. expect Nifty to navigate the range of 17350-17650 levels, while Bank Nifty may find support in the 37200-37000 area. price increase.
The India VIX volatility index fell 2.05 percent to 17.78. “Implied Call Volatility closed at 15.93% and Puts closed at 16.79. The Nifty VIX for the week closed at 18.16%, which was slightly lower than the previous week. The OI PCR for the week closed at 1.33,” Bicht noted.
FII activity remained largely muted ahead of quarterly results and in the final three sessions of the past week. FIIs sold for nearly Rs1,120 crore. In April so far, FIIs remained net buyers of almost Rs 6,150 crore in the secondary markets, suggesting considerably weak activity after the steady selling pressure seen over the past six months. Meanwhile, domestic institutions also stayed on the sidelines and bought just over Rs366 crore in the truncated week.
In the F&O space, FIIs turned net sellers as net longs declined further over the week. They sold index futures to the tune of Rs3,530 crore and Rs3,053 crore in the equity futures segment. Even they were selling just 238 million rupees worth of index options since last Friday.
The NSE Banking Index closed the week at 37,463.40 points, a slight decline of 288.65 points or 0.76%, from the previous week’s close of 37,752.05 points.
Writing a major call came at 38,000 strikes as this remains an area of hurdles for Bank Nifty. Despite circular saws, the Put write positions at 37,000 strikes for the upcoming weekly expiration remained intact.