F&O Manual: Directionless market makes it tough for traders; support for Nifty at 17,450

Among individual stocks, Oberoi Realty saw heavy accumulation of positions by bears.

The equity market was again under pressure on April 21 amid resurfacing of worries about rate hikes by the US Federal Reserve. At of 10.46 am, the benchmark Nifty index was trading 0.13 percent, or 29 points, lower at 17,601.

Analysts say the biggest negative catalyst is that the Fed hawks are back in town and traders are pricing in an 86 percent chance of another 25 basis points hike in May. Falling global crude prices offered some comfort to a sluggish market.

The options data shows that the maximum call writing was at 17,700 strike, which is emerging as the biggest hurdle for the index. The level of 17,600 is the battle zone where most traders have employed neutral strategies. These strategies tend to make money when the market moves sideways.

The bars reflect changes in open interest (OI) during the day. The red show call option OI and the green put option OI.

“The technical landscape now suggests that some consolidation could be at play amidst overbought conditions on the daily charts with inter-week support for Nifty seen at 17,443 mark, while intraday support is at 17,561 mark. The index is likely to face immediate hurdles at 17,863-18,157 levels,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.

Another problem that traders, especially option sellers, are facing is low VIX, which is keeping the premium very low. This is limiting not just their zeal to trade but also their profits low. The VIX, or the volatility index, indicates volatility expected in the market over the next 30 days.

Among individual stocks, Oberoi Realty saw a heavy accumulation of positions by bears. Other real estate and building material suppliers such as DLF and Ramco Cement also saw a short buildup.

Telecom firms Vodafone Idea and Indus Towers saw a long buildup, meaning traders are taking bullish bets on these stocks. Page Industries, Lupin and ITC were other stocsk to see similar trends.

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