F&O Manual | Nifty inches higher but upside limited as call writers active at 19,150

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The benchmark Nifty started the session on a positive note, buoyed by upbeat cues from global markets after the US Federal Reserve decided to keep interest rates unchanged for the second time in a row.

The positive sentiment ushered buying from lower levels, helping the Nifty reclaim the 19,100 mark.

All sectoral indices were trading in the green by mid-day, with PSU banks, pharma and infra being the top gainers. Around noon,  the Sensex was up 281.33 points or 0.44 percent at 63,872.66, and the Nifty 94.80 points or 0.50 percent at 19,084.00. About 2,039 shares rose, 1,021 fell and 117 remained unchanged.

The bars in green represent the change in the put open interest (OI) and the red the change in OI for call options.

Options data indicates a struggle between call and put option writers, with the 19,100 strike witnessing strong additions of positions from both sides. The face-off between bulls and bears eventually resulted in the Nifty coming off its high to below 19,100 in the cash market.

Heavy call writing was also seen at the 19,150 strike, suggesting that the Nifty's move upwards will be met with much resistance. On the downside, put writers are going heavy on the 19,000 strike, as they attempt to hold the fortress for the benchmark index.

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"Our stance on Nifty50 remains the same, oscillating in the range of 18,800-19,250 till we get a clear breakout on either side," said Aditya Gaggar, Director of Progressive Shares.

ICICI Securities shared a similar view, saying the focus may shift to midcap names considering that most of the results from heavyweights were over. The Nifty may spend some time in the 18,800-19,250 range.

On the stock-specific level, Ambuja Cements saw a sharp covering of short positions, buoyed by the company's nine-fold jump in the September quarter net profit. Adani Enterprises also saw a covering of short positions ahead of its Q2 results.

REC, PFC, Delta Corp and Lupin were some names that saw a strong increase in long positions, while LIC Housing Finance witnessed an addition of short positions as investors moved to book profits following the lender's strong Q2 earnings.

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