Weekly signals from futures and options market

Akhil Nallamuthu | | Updated on: Jan 08, 2022
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The Nifty 50 (up by 2.6 per cent) and the Nifty Bank index (up by 6.4 per cent) ended the week with a gain. While the Nifty Bank outperformed the Nifty in price terms, let us see how derivatives data back this up.

On the derivatives front, the total number of outstanding open interest (OI) of all active futures of the Nifty on the NSE stood at nearly 115 lakh contracts on Friday compared to 111.7 lakh contracts a week ago. The increase in OI along with a weekly gain indicate long build-up on Nifty futures.

On the other hand, the total outstanding OIs on Nifty Bank was at 24.2 lakh contracts on Friday versus 24.6 lakh contract by the end of the preceding week. Here, there is not much change in OI and the gain on the index is not really backed by fresh build-up in longs hinting at a weaker rally compared to that of Nifty 50.

In the nearest expiry (January 13), 18,000-strike call option (18000-CE) on the Nifty is the most active with 91,701 outstanding OIs. The option gained sharply and ended at ₹65 versus preceding week’s close of ₹14.1.

Among the puts, 17,500-strike put option (17500-PE) is the most active with 83,015 contracts – this option significantly dropped to ₹39.65 on Friday as against ₹251.2 a week back. The Nifty can be expected to end this week’s expiry within 17,500 and 18,000.

Similarly, in Nifty Bank options, 38000-CE and 36000-PE seems to be the participants’ favourite with 78,582 and 58,447 open contracts, respectively. Hence, the Nifty Bank is likely to close this weekly expiry within 36,000-38,000 band. The CE price shot up to ₹320 versus previous week’s ₹28 whereas the PE price tumbled to ₹42 from ₹807.2.

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Published on January 08, 2022

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