By Rajesh Palviya
In Nifty current series there has been a Long Build Up witnessed with increase in price of 0.57% and increase in OI by 16.52% as of Wednesday wherein there was addition of 18.24 lakh shares in OI, increasing from 110.40 lakh to 128.63 lakh shares till Tuesday. The NSE Nifty 50 current month rollover stands at 26% as of Wednesday, while. Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.92 compared to 1.07 of last week, indicating flat-to-negative bias.
Nifty Put options OI distribution shows that 16,300 has highest OI concentration followed by 16,200 & 16,100 which may act as support for current expiry and on the Call front 16,500 followed by 16,600 & 16,700 witnessed significant OI concentration and may act as resistance for current expiry.
In the weekly options there was Call writing seen at 16,500 strike followed by 16,700 & 16,600 while on the Put side noticeable activity of writing was witnessed in 16,300 ,16,200 & 16,100 strike prices. Options data suggest an immediate trading range between 16,100 and 16,700 levels.
Nifty Open Interest Concentration
Nifty Open Interest Change
Bank Nifty Outlook
In current series there has been a Short Build Up witnessed in Bank Nifty Fut with an decrease in price of -3.85% and increase in OI by 45% as of Wednesday, wherein there was addition of 9.28 lakh shares in OI, increasing from 20.57 lakh to 29.85 lakh shares. Bank Nifty Current series rollover stands at 50% as of Wednesday, while Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.76 compared to 0.60 of last week indicating flat-to-negative bias.
Bank Nifty Put options OI distribution shows that 33,500 has highest OI concentration followed by 33,000 which may act as support for current expiry and on the Call front 34,500 followed by 35,000 witnessed significant OI concentration and may act as resistance.
In weekly options Call writing seen at 34,500, 34,000 & 34,500 strike while on the put side it was seen at 33,000 , 33,500 & 33,200 Options data indicated an immediate trading range between 33,000 and 34,500 levels.
Bank Nifty Open interest Concentration
Bank Nifty Open Interest Change
Sectors and stocks in focus
We expect IT, Pharma, Capital Goods, Sugar, and Automobiles can show good upside in the near term. One can focus on stocks like Infosys, Housing Development Finance Corporation (HDFC), Bharti Airtel, Maruti Suzuki, Tata Consumer Products, Balrampur Chini Mills, L&T, Sun Pharma, and Cipla.
NSE Nifty 50 trading strategy for weekly F&O expiry day
The strategy which we are suggesting for this weekly expiry dated 10th March is a Bullish strategy called as CALL LADDER, which involves Buying of one lot of NIFTY 16,400 Call @ 97 & selling of one lot each of 16,550 Call @ 42 & one lot of 16,700 Call @ 14. The cost of the strategy involves outflow of Rs 2,050 which is the maximum loss if NIFTY trades & remains below 16,440 levels on expiry.The maximum profit of Rs 5,450 will be attained at 16,550 levels, while strategy will start making loss above 16,800. Call Ladder although being a limited profit & unlimited risk strategy; is an extension to the bull call spread and to further bring down the cost of the premium one more extra leg of OTM call is sold and hence any move above the sold leg can incurred unlimited loss, hence it’s advisable to exit the strategy in total to avoid unlimited losses above 16,800. Break Even points of the strategy are 16,809 on Upside & 16,441 on the lower side.
(Rajesh Palviya, VP – Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)
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