F&O Tracker: Range bound indices in sight

Akhil Nallamuthu |BL Research Bureau | Updated on: Feb 19, 2022

Stock Market Data/chart illustration istock photo for BL | Photo Credit: honglouwawa iStockphoto

The Nifty 50 and the Nifty Bank began the week with a gap-down and witnessed considerable volatility during the first half. However, the volatility dropped, and both the indices were largely flat during the second half of the week. Nifty 50 (17,269) lost 0.6 per cent and Nifty Bank (37,571) depreciated by about 2.5 per cent.

There is a bearish bias denoted by the cumulative open interest (OI) of both the indices. That is, the cumulative OI of Nifty 50 went up to 127.6 lakh contracts on Friday compared to 109.3 lakh contracts a week back. For Nifty Bank, it increased to 21.8 lakh contracts from 21.2 lakh contracts in the corresponding period. The OIs have gone up with a drop in price meaning short build-up in both.

In Nifty 50, 18000-strike call option (18000-CE) and 17500-CE are the most active strikes with 1.43 lakh and 96,183 contracts, respectively as outstanding OI. Whereas 17000-strike put option (17000-PE) and 16000-PE are the most sought after among the puts with 1.16 lakh and 83,852 contracts, respectively as outstanding OI. This suggests that the index could end the current expiry within the price band of 17,000 – 17,500. At the same time, OI data indicate that a breach of 17,000 can trigger a fall to 16,000.

In Nifty Bank, 39000-CE and 40000-CE seems to be the preferred strike for sellers as the outstanding OI are at 60,871 and 60,303 contracts, respectively. Similarly, 37000-PE and 37500-PE are the most active with 55,973 and 48,769 contracts, respectively. The index could close between 37,500 and 39,000 on expiry.

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Published on February 19, 2022
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