Option writers expect Nifty to trade in a broad range

Weekly F&O Data

by 5paisa Research Team Last Updated: Oct 31, 2023 - 11:31 am 357 Views
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Nifty50 30.10.23.jpeg

Nifty started Monday’s session on a flat note and witnessed a minor dip in the first hour of the trade. However, it recovered from the lows and then traded with a positive bias throughout the day to end just below 19150 with gains of about half a percent.

Post last week’s fall, Nifty had seen some pullback move in Friday’s session and continued that momentum at the start of the week. However, given last week’s move, it is difficult to say if the markets have bottomed. If we look at the data, FII has about 88 percent of the positions on the short side in the index futures segment which is short-heavy. The RSI oscillator on the lower time frame charts was oversold which has resulted in this pullback move but the readings on higher time frame charts are still negative. Hence, this move should just be seen as a pullback move for now, and the near-term trend will depend on the global market news flows and momentum going ahead. The immediate resistance for Nifty is seen around 19200-10250 as the 19200 strike call option has the highest open interest build-up for the weekly series. On the flipside, the 19000 put has high open interest which would be seen as support this week. Overall, although the FII positions are short-heavy, we have not yet seen any signs of short covering and hence traders are advised to stay cautious for a while and look to lighten up positions in the pullback move. If the support of 19000 gets breached, then the put writers may have to cover their positions which would have a negative impact on our markets. Traders are advised to watch for above-mentioned levels and trade accordingly.

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