The Nifty 50, benchmark index, rallied last week and ended up gaining 3 per cent as it closed at 17,670. Similarly, the Nifty Bank surged by 4.91 per cent last week closing at 37,148 on Friday.

While there was bullish build-up in the Nifty 50 for most part of the week, on Friday, there was a significant drop in cumulative open interest (OI). This could be an indication of long unwinding towards the end of the week. The cumulative OI of Nifty 50 stood at 142.3 lakh contract compared to 163 lakh contracts a week ago. Notably, on Thursday, it was at 198 lakh contracts.

The Nifty Bank, too, saw some long build-up in the first half of the week but then, like the Nifty 50, there was a considerable drop in cumulative OI. On Friday, the cumulative OI was at 39.3 lakh contracts as against 65.7 lakh contracts by the end of the preceding week.

The Put-Call Ratio (PCR) of Nifty options (April 7 weekly expiry) were largely unchanged at 1.12 versus previous week’s 1.06. Meaning, fresh OI build-up occurred almost equally in Call and Put options; 18000-strike Call option (86,414 contracts) and 16500-strike Put option (1,02,690 contracts) have the highest number of OI, thus acting as key resistance and support, respectively.

On the other hand, PCR of Nifty Bank (April 7 weekly expiry) increased to 1.28 as against 0.78 last week. This indicates more Put writing —38000-strike Call (52,717 contracts) and 36500-strike Put (59,952 contracts) are the most active contracts. Thus, 38000 and 36500 can be key resistance and support, respectively.

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