Rollovers higher than three-month average, but lower OI indicates volatile swing

Chandan Taparia

Chandan Taparia

Nifty index continued its formation of higher lows for the fifth consecutive week and headed towards 9,889 levels.

It closed positive for fourth consecutive session on April 30 and formed a bullish candle on daily and weekly scale. It has seen a strong rebound of 31 percent from lower levels in last 23 trading sessions and now requires positive global sentiment with follow up move in Indian market to hold beyond it 50-DEMA.

It has recently completed its 38.20 percent retracement of entire fall from 12,430 to 7,511 levels and now key hurdle is 50 percent retracement at 9,970 levels. It has to hold above 9,400 zone to witness an upmove towards 9,889 then 9,970 levels while downside key support exists at 9,250 then 9,000 levels.

India VIX fell by 13.11 percent from 39.11 to 34 levels on weekly basis. VIX has been falling down from last five weeks and corrected by 60 percent from its recent swing high of 86.64 levels.

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Chandan Taparia

Vice President and Analyst-Derivatives|Motilal Oswal Financial Services

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As it is the beginning of May month series, open interest activity is scattered at various strikes. Maximum Call open interest is placed at 9,500 then 10,000 strikes while maximum Put open interest is at 9,000 then 8,500 strikes. We have not seen meaningful writing on Call side while decent Put writing was seen at 9,500 and 9,000 strike. Option data indicates that an immediate trading range in between 9,000 and 10,000 levels.

Bank Nifty managed to surpass its previous hurdle of 21,350-21,500 and headed towards 22,000 levels. However, it concluded the session around the opening price and formed a Doji candle on daily chart which is a sign of absence of follow up at higher zones. It continued to make higher highs - higher lows for fourth consecutive week and outperformed the benchmark index. Now, it has to hold above 21,000 levels, for an upmove towards 22,500 - 23,000 zone while support is placed at 20,500 then 20,000 levels.

While stock-specific positive view is seen in Bharti Airtel, Infosys, HCL Technologies, etc., weakness is seen in SBI, Siemens, LIC Housing Finance, etc.

Nifty rollover stood at 71.29 percent which is higher than last three-month average of 68.69, but open interest is lower in term of the number of share, indicating a volatile swing.

(The author is Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.)

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