5 cues from F&O market: Fresh Call writing shifts market top lower to 8,300

NEW DELHI: Fresh Put writing at strike prices 7,500 and 8,100 is likely to lend support to the index ahead of key global events such as Italian referendum as well as the Reserve Bank of India's policy review meet due next week, according to options data.

Put Option Activity: Fresh Put writing was seen at 7,500 (2.12 lakh contracts added), 7,800 (1.1 lakh contracts added), 7,900 (1.6 lakh contracts added), 8,000 (4.04 lakh contracts added), and 8,100 (4.6 lakh contracts added). There was hardly any Put unwinding.

Total Put open interest of 70.73 lakh contracts stood at strike price 8,000, which will act as a crucial base for the market in the December series, followed by strike price 7,500, which saw accumulation of 26.97 lakh contracts, while strike price 7,900 had 25.99 lakh contracts in open interest.


"On the options front, maximum Put OI was seen at strike prices 8,000 where total outstanding OI stood at 71 lakh shares followed by strike price 7,900 while maximum Call OI was seen at strike prices 8,300 followed by 8,500," Chandan Taparia, Derivatives & Technical Analyst - Equity Research at Anand Rathi Financial Services, told ETMarkets.com.

"We have seen fresh Put writing at strike prices 8,000 and 8,100, which is shifting the support while significant Call writing was seen at strike price 8,300 which would keep the limited upside on an immediate basis," he said.

Call Option Activity: Fresh Call writing was seen at strike prices 7,500 (2.1 lakh contracts added), 8,100 (2.1 lakh contracts added), 8,300 (5.7 lakh contracts added), 8,400 (1.2 lakh contracts added) and 8,500 (0.98 lakh contracts added).

The maximum Call open interest of 35.68 lakh contracts stood at strike price 8,300, which will act as a key resistance for the index in December series, followed by strike price 8,500 which has accumulated 36.56 lakh contracts, while strike price 8,400 had 33.46 lakh contracts in open interest.

PCR: The Nifty50 Put-Call ratio (PCR) closed above 1 at 1.11. A PCR above 1 is considered bullish while a PCR below 1 is considered bearish.

India VIX: The India Volatility Index (VIX), a gauge of the market's short-term expectation of volatility, contracted by 7.5 per cent to 16.9 on Tuesday from 18.05 recorded in the previous session.

Nifty Bank: Nifty Bank has been underperforming the broader market in the past few sessions and slipped towards 18,187 mark. The Nifty50 has taken a pause from selling and has been witnessing bounce back move.

"Nifty Bank as it has been making the lower top - lower bottom and that is the cause of concern for the short term stability in the market," said Taparia.

"It has to respect its multiple supports placed at 18,150 level and below that it may start the fresh decline while a decisive move above 18,500 might get stability towards 18,850-19,000 levels," he said.