F&O Manual: Trade to hinge on FOMC outcome tomorrow, initiate non-directional strategy, say analysts
"Even though the market has priced in 25 bps rate hike, any negative commentary from Fed chair Jerome Powell can trigger selling," says Viraj Vyas of Ashika Stock Broking.
The market managed to hold on to its gains through the session despite high volatility and ended in the green on March 22. However, investors chose to remain on the sidelines in anticipation of the US Federal Reserve's monetary policy outcome, due later today which capped gains in the market. At close, the Nifty was up 44.40 points or 0.26 percent at 17,151.90. (Blue bars show volume and golden bars open interest (OI)).
2/5
On the options front, heavy put writing was seen at 17,150 as bulls fought to hold this level. Among call options, maximum accumulation of writers was seen at 17,400, followed by 17,250. Since much of the market trend on Thursday will hinge on the Fed's monetary policy decision and commentary, Viraj Vyas, Technical and Derivatives Analyst at Ashika Stock Broking suggested investors to initiate a non-directional short strangle by writing call options of 17,300 and put options of 16,800. He also expects short covering to be triggered only after the Nifty decisively moves past 17,200. (Bars reflect change in OI during the day. Red bars show call option OI and green put option OI.)
3/5
Similar to the Nifty, the Bank Nifty index also settled the session with modest gains. The 40,000 strike price emerged as a battleground as the maximum call as well as put writing was seen at that level. "Traders are going into Thursday's weekly expiry in Bank Nifty with the 40,000 short straddle positions, this is for the monthly expiry as well. Bank Nifty will gain momentum all the way up to 40,800 once it crosses the 40,200 mark," said Rahul Ghose, Founder & CEO – Hedged, an algorithm-powered advisory platform. Ghose also sees a congestion zone between 40,800 and 41,200, and suggests investors to aggressively add fresh long positions only after 41,200 is surpassed. (Bars reflect a change in OI during the day. Red bars show call option OI and green put option OI.)
4/5
Bandhan Bank saw the maximum addition of long positions as open interest in the counter jumped 6 percent, highest in a month. The rise in open interest was also accompanied by strong volumes that were at a one-week high. Other stocks that also saw long buildup were Can Fin Homes, Dr Lal Pathlabs, HDFC Life Insurance Co and ICICI Prudential Life Insurance Co. A long build-up is a bullish sign that happens when open interest and volume increase with the rise in share price. (Bars reflect a change in OI during the day. Red bars show call option OI and green put option OI.)
Amid high volatility in the market, short buildup was also seen at certain counters including BHEL, SAIL, National Aluminium Co, and Adani Ports and Special Economic Zone. However, it was ABB India that saw the maximum addition of short positions, with open interest rising to a one-month high of 11.9 percent. The short build-up is a bearish sign that takes place when the price of a stock falls, along with high open interest and volume. (Bars reflect a change in OI during the day. Red bars show call option OI and green put option OI.) Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
![Similar to the Nifty, the Bank Nifty index also settled the session with modest gains. The 40,000 strike price emerged as a battleground as the maximum call as well as put writing was seen at that level. "Traders are going into Thursday's weekly expiry in Bank Nifty with the 40,000 short straddle positions, this is for the monthly expiry as well. Bank Nifty will gain momentum all the way up to 40,800 once it crosses the 40,200 mark, said Rahul Ghose, Founder & CEO – Hedged, an algorithm-powered advisory platform. Ghose also sees a congestion zone between 40,800 and 41,200, and suggests investors to aggressively add fresh long positions only after 41,200 is surpassed. (Bars reflect a change in OI during the day. Red bars show call option OI and green put option OI.)](https://images.moneycontrol.com/static-mcnews/2023/03/3-6.png "Similar to the Nifty, the Bank Nifty index also settled the session with modest gains. The 40,000 strike price emerged as a battleground as the maximum call as well as put writing was seen at that level. "Traders are going into Thursday's weekly expiry in Bank Nifty with the 40,000 short straddle positions, this is for the monthly expiry as well. Bank Nifty will gain momentum all the way up to 40,800 once it crosses the 40,200 mark, said Rahul Ghose, Founder & CEO – Hedged, an algorithm-powered advisory platform. Ghose also sees a congestion zone between 40,800 and 41,200, and suggests investors to aggressively add fresh long positions only after 41,200 is surpassed. (Bars reflect a change in OI during the day. Red bars show call option OI and green put option OI.)")
