Bank Nifty bearish to sideways on weekly expiry day, trader says sell call options

At 11:32 hrs IST, the Sensex was down 143.72 points or 0.20 percent at 73,368.13, and the Nifty was down 29.30 points or 0.13 percent at 22,273.20.

Bearish trend in Bank Nifty persisted on May 8, the weekly expiry day, with the index falling 149 points to 48,136, at around 9:50 am, trading very close to its technical support levels. Traders suggest selling call options ahead of today’s weekly expiry, considering the derivatives data, which shows limited upside possibility.

The support for the Bank Nifty index is seen in the 47,900-48,000 zone, while resistance is observed at 48,450-48,500 for the weekly expiry day. Experts said that if Bank Nifty slips below 47,900, it could trigger further selling pressure, potentially driving the index down to 47,600-47,700.

Derivatives Data

Bank Nifty futures have seen a short addition of 7 percent. For the May 8 expiry, the highest Open Interest (OI) is observed in near strikes at 49,500 CE, followed by 48,500 CE. On the put side, the highest OI in near strikes is at 48,000 PE, followed by 47,500 PE.

Technical view

“Bank Nifty closed (in the previous session) below last week’s low of 48,343, which is a very negative development,” said JM Financial.

The brokerage sees the immediate support for Bank Nifty at 48,000. A breach of this level will intensify the selling pressure, potentially dragging Bank Nifty to lower levels of 47,650-47,700, it said. On the upside, immediate resistance stands at 48,600, it added.

The expected weekly expiry range for Bank Nifty is 48,000-48,600, it said.

Trader's view

“After 3 days of continuous fall, the market is trying to create a base for a bounce, but at present it looks unsuccessful. It’s very likely to see the market to have a sideways to bearish day especially for Bank Nifty. In such a market, selling Call options with appropriate stop loss and hedge is the ideal strategy,” said derivatives trader Shijumon Anthony.
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