Top five cues from F&O mart: Fresh Call writing at 8,800, 9,100 to limit upside

NEW DELHI: The Nifty50 was hovering near the crucial level of 8,800 on Thursday supported by fresh Put writing at strike prices 8,700 and 8,800. Fresh Call writing at strike prices 8,900, 9,000 and 9,100 is likely to limit upside.

Put options activity: Put writing was seen at strike price 8,600 (2.2 lakh contracts added), followed by 8,700 (10.96 lakh contracts added) and 8,800 (9.12 lakh contracts added). Put unwinding was seen at strike price 8,000, where 2.3 lakh contracts were shed.

Total Put open interest of 62.91 lakh contracts stood at strike price 8,500, which will act as a crucial base for the market in the September series, followed by strike price 8,600, which saw accumulation of 58.64 lakh contracts, while strike price 8,400 had 46.29 lakh contracts in open interest.



Call options activity: Call writing was seen at strike prices 8,900 (3.8 lakh contracts added), 9,000 (5.6 lakh contracts added) and 9,100 (5.4 lakh contracts added). However, Call unwinding was seen at strike prices 8,800 (3.8 lakh contracts shed) and 8,400 (3.6 lakh contracts shed).

The maximum Call open interest of 57.97 lakh contracts stood at strike price 9,000, which will act as a key resistance for the index in September series, followed by strike price 8,900 which has accumulated 40.61 lakh contracts, while strike price 8,800 had 33.83 lakh contracts in open interest.

“The trend is intact to positive but heavy Call writing at strike prices 8,800, 8,900 and 9,000 might lead to a positive to range-bound move before any fresh momentum starts,” Chandan Taparia, Derivatives & Technical Analyst - Equity Research at Anand Rathi Financial Services, told ETMarkets.com.

The index has to continue to hold above the 8,728 level to witness an upward move towards the 8,844 and then finally 9,000 levels. “We have seen fresh Put writing at strike prices 8,700 and 8,800, while Call writing has now started shifting to strike prices 8,900, 9,000 and 9,100," he said.

FII activity: Foreign institutional investors ( FIIs) kept on pouring money in both equity cash and index futures segments on Wednesday. They bought equities worth Rs 854 crore and were net buyers of positions to the tune of Rs 2,886 crore in index futures with a rise in OI, which indicated huge fresh long formation in last trading session.

On the index options front, FIIs were net buyers of positions worth Rs 428 crore with a good rise in OI. Highest OI in September series is visible in the Call option of strike price 9,000 and Put option of strike price 8,500.

From the start of the September series, meaningful long additions were seen in the index futures. “We are seeing a good amount of fresh long formation in out-of-the-money Call options at strike prices 9,000 and 9,100,” Angel Broking said in a note.

"We believe these are long positions formed by FIIs. While, Put writing at 8,600 and 8,700 levels was also visible. Thus, the Nifty50 may continue to show strength and may test the 8,950 and 9,000 levels in the near term," the note said.

India VIX: The India Volatility Index (VIX), a gauge of the market’s short-term expectation of volatility, expanded marginally to 13.24 from 13.02 recorded in the previous session.

PCR: The Nifty50 Put-Call ratio (PCR) expanded on Thursday to 1.21 from 1.16 recorded in the previous session. A PCR above 1 is considered bullish while a PCR below 1 is considered bearish.