The Nifty50 reversed most of its previous day's gains and closed the volatile session on a negative note on March 28 as traders may be cautious ahead of the monthly futures and options expiry tomorrow. The index largely traded within the range of 16,900-17,100 and 16,900 has been playing crucial support for the third straight session.
Overall, the index is likely to stay within the same range in the coming sessions and the breaking of this range decisively can give the Nifty50 a firm direction on either side. Beyond the same, going forward, 16,800 is expected to remain crucial support and the 17,200-17,250 area is likely to be the key hurdle on the upside, experts said.
The Nifty50, after opening higher at 17,032, largely remained in the range of 60 points for a major part of the session. The index finally settled at 16,952, down 34 points and formed a bearish candlestick pattern on the daily scale.
"For the index, 16,900 would act as a key support level and on further uptick, it could retest the level of 17,050-17,100," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
On the flip side, he believes that a fresh sell-off is possible only after the dismissal of 16,900 and below the same, the index could slip to 16,820-16,800.
The Option data indicated that 17,000 and 17,100 strikes, which have maximum Call open interest as well as Call writing, are expected to be crucial levels on the higher side for expiry day. The maximum Put open interest was also seen on 17,000 strike, followed by 16,800 strike, with Put writing at 16,700/16,900 strikes and unwinding at 17,000 strike.
The futures & options contracts for March month will see expiry on Wednesday as there will be a market holiday on Thursday for Ram Navami.
"The 17,000 Call has the highest open interest for Wednesday's expiry and will be a tough hurdle to cross. Apart from the 17,000 Call – the 17050 CE, the 17100 CE and the 17150 CE – all saw significant shorting today. Traders are going into tomorrow's expiry with a bearish-to-neutral view," Rahul Ghose, Founder & CEO at Hedged said.
Taking this data into account, Ghose advised that traders should look to initiate short straddles with a bought Put option as an offset unit to take advantage of the current outlook of open interest for this expiry.
The Bank Nifty also remained rangebound and closed with 137 points gains at 39,568, forming Inside Bar (as it traded inside the trading range of the previous session) as well as a Doji kind of pattern on the daily charts while taking support at the 39,250 area for the third consecutive session.
"Overall absence of follow-up was seen on either side and it is getting stuck within the broader trading range. Now till it holds below 39,750, a bounce could be sold for the weakness towards 39,250 and 39,000 levels while on the upside hurdles are expected at 39,750 and 40,000 levels," Chandan Taparia, Vice President, Analyst-Derivatives at Motilal Oswal Financial Services said.
As per Option data, "Bank Nifty has its highest Call open interest at the 40,000 strike indicating Wednesday's expiry close to happen below 40,000 level," Ghose said. The highest Put open interest was at 39,500 strike, followed by 39,000 strike.
India VIX was down by 2.23 percent from 15.45 to 15.10 levels, giving swings to the market in either direction.
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