In the early hours of January 16, the benchmark indices were range-bound following a jubilant rally fueled by robust earnings from major players in the IT industry.
According to experts, the Nifty’s options data shows a likely continuation of the rise, testing higher levels at 22,300 and 22,500. With a positive outlook denying just below 21,700, immediate trading support is observed between 22,000 and 21,900.
The Nifty was up 11.90 points, or 0.05 percent, at 22,109.40 at 11:20 a.m., while the Sensex was up 46.07 points, or 0.06 percent, at 73,374.01.
A little over 1,642 shares increased, 1,527 fell, and 64 were unchanged.
Put and call writers appear to be at odds at 22,000, 22,100, and 22,200 strikes, according to options data. “Long positions increased by 4% on the Nifty Futures, while the OIPCR for the weekly expiry on January 18 increased to 1.51, suggesting that put writers were making a comeback. The spike in OIPCR is mostly related to extensive unwinding, notably in In The Money calls from 21,800 to 22,000, and aggressive put writing positions added at 22,000 PE. SVP of derivative research at JM Financial Avani Bhatt stated that the biggest OI is 22500 CE with 1.34 lakh contracts, followed by 22,300 CE with 1.27 lakh contracts.
“With 1.56 lakh contracts at 22,000 PE, the highest OI on the puts side is currently attained. Next in line are the puts at 21,700 and 21,800, each with an average OI of 1.36 lakh contracts. Options data suggests that the rally will continue to attempt higher levels of 22,300 and 22,500. The current trading support is 22,000/21,900. Positive views only nullify anything below 21,700, according to Bhatt.
For a target of 22,300/22,500, she suggests using a buy-on-dips strategy up to 21,900–21,950, with a strict stop-loss of 21,700 for all long holdings.
The Nifty PCR_OI is stronger at 1.53 right now, but it’s getting towards the overbought zone. Aggressive Put writing was observed in 22,000 and 21,900 strikes, and it was also evident in 22,200, 22,300, and 22,500 calls. The overall range for the upcoming sessions may be 22,400 on the upside and 21,930 on the downside.
Currently up 30.50 points, or 0.14 percent, at Rs 21,491.85, Finnifty is slightly higher.
“The spot 21400 and 21500 levels are where the Fin Nifty index is now trading in a narrow range. The upward tilt on its weekly expiry day may only be confirmed by a breakout over 21500, even though the underlying bias is still bullish. Writing is seen in 21500 CE on the option side, suggesting weakness around that mark.
“Unfortunately, 21400 has a comparable structure, with writers firmly controlling the relevant field. OI concentration indicates a close call for the day in both 21450 CE and PE. In case the index breaks 21400, it may try to find support in the area of spots 21320–21300.