F&O view: Nifty50 likely to hold 7,300 level till expiry on Thursday

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NEW DELHI: Being expiry week, investors will have to deal with volatility on Wednesday as well as on the expiry day, Thursday. But, experts are confident that Nifty50 will not break below 7,300 levels in case index starts trending southwards.

The level of 7,300 strike holds maximum Put OI of 58.25 lakh contracts and this is after 14.19 lakh contracts were shed on Monday. There is significant support for Nifty50 at 7400 levels as well, where the total Put OI stands at 46.66 lakh contracts.

“Looking at the option data, maximum put OI is intact at 7300 strike which would continue to hold the index above 7300 zones till the end of expiry which sustained call writing at 7500 strike would keep it below 7480-7500 zones,” said Chandan Taparia, Derivatives & Technical Analyst – Equity Research at Anand Rathi Financial Services.

“Roll cost for January series is slightly higher than previous series roll cost but still lower to past six month average. This indicates that longs are not aggressively carrying their position as immediate trend is still under pressure even after a short term bottom near to 7250 zones,” he added.

The index has to cross and hold above 7,539 in the February series to get a comfort or a hope for pre-budget rally for bulls as otherwise it might trade in range. In case the Nifty50 starts trading below 7300, it may even fad out recent recovery to drag the index towards new 52 week low levels, say experts.

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Foreign institutional investors (FIIs) were net seller in both equity cash and Index future segment on Monday. They sold equities to the tune of Rs 91 crore; in Index Futures, selling was worth Rs 982 crore with rise in OI, indicating short build-up in last trading session.

In Index Options front, FIIs activity remained subdued. In call options, 7500 – 7600 strikes were active and they added some decent OI. Some unwinding was seen in 7300 & 7400 call options, which may be due to profit booking, say experts.

Going by the option data, fresh Call writing was seen in 7500 strike (9.4 lakh contracts were added), and 7600 (8.8 lakh contracts were added). While in put options, marginal build-up was seen in 7450 strike. On the other hand, good amount of unwinding was seen in 7300 strike.

Fresh additions in 7500 strike take the total Call Open interest to 55.96 lakh contract, followed by 7600 strike which has total open interest of 49.36 lakh contracts, and 7800 strike which has a total of 46.20 lakh contracts.

“Maximum build-up in current series is now visible in 7500 call and 7300 put options. We believe, we may not see any major fall or bounce in Nifty from current levels in January series,” Angel Broking said in a note.

“Nifty may test the resistance zone of 7500-7550 levels; one should book profits near these levels,” said the note.

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