F&O Manual: Buy calls on dips as Nifty regains its mojo, say analysts

The market continued its recovery for another day as the market momentum seems to be changing. The Nifty 50 ended the day up 0.67 percent or 117 points at 17,711. The index faced resistance at 17,800 level during the day. (Blue bars show volume and golden bars open interest (OI).)

On the option front, 17,700 saw the largest accumulation of put writers, as this level emerged as the support level. “Momentum is likely to be on the positive side. Traders can buy calls on dips towards 17,600 level,” Ruchit Jain, Lead Research Analyst at 5paisa Securities. (Bars reflect change in OI during the day. Red bars show call option OI and green put option OI.)

The Bank Nifty index witnessed some selling pressure from higher levels but the broader trend remains bullish and one should keep a buy-on-dip approach. “The index lower-end support stands at 41,000 where the highest open interest is built up on the put side and the upside resistance is at 42,000. The index is likely to trade in this range for the next couple of trading sessions,” Kunal Shah, Senior Technical Analyst at LKP Securities. (Bars reflect change in OI during the day. Red bars show call option OI and green put option OI.)

Polycab India saw long buildup with open interest rising 54 percent. A long build-up is a bullish sign that happens when open interest and volume increase with the rise in share price. Indraprastha Gas, Gujarat Gas and ONGC were others that saw heavy ong buildup. (Bars reflect change in OI during the day. Red bars show call option OI and green put option OI.)

Tata Steel saw massive trader interest as it saw short buildup. 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 change in OI during the day. Red bars show call option OI and green put option OI.)
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