F&O: Nifty may target 5550 this week

The Nifty was unable to sustain Monday’s momentum despite positive clues from world market and closed up only 7 points. The overall market cost-of-carry ended in the negative. Nifty futures closed at a discount of 2 points, indicating short carry-forward. Nifty is expected to remain in the range of 5350-5530 levels this week with positive bias. The options concentration continues to be at 5300-strike put option with an open interest of above 85 lakh shares. This is followed by the 5400-strike put option, with above 69 lakh shares. Among call options, the 5500-strike holds the highest open interest of above 76 lakh shares followed by the 5600-strike call with above 73 lakh shares.

The option data indicates put writing at 5300 strikes and call writing at 5500 strike. The put-call ratio of open interest marginally decreased on Tuesday closing at 1.38 levels. The implied volatility (IV) of call options closed lower 15.28% while the average IV of put options ended at 15.92%. Nifty VIX is trading flat and the trend is likely to continue in the coming days. Most of the derivative indicators are hinting at a positive move and a Nifty target of 5500-5550 can be expected in the current week.

The Nifty index may find intermediate support around 5300 levels and resistance near 5480-5550 levels. Activity in market is now limited to some specific sectors like banking and metals. On the stock-specific front, heavyweights like Reliance Industries, Bharti Airtel and ONGC are hinting at a positive trend and are expected to move up.

By Vineet Sood, Sr Analyst-Derivatives, SMC Global Securities.