Bank Nifty and Nifty analysis based on OI and Change in OI for Monday 16th March

The week that have passed will be remembered for the major spikes in the volatility and for the indices hitting lower circuit after 2008. Our domestic market faced worst-ever weekly decline as it breached an important support. Friday, Nifty and bank nifty opened with a gap down and got lower circuit. Trading was halted for 45 minutes then rallied sharply towards 10000 as trading resumed. Now, we will look into option data and trend cycles and analyze them for trading on Monday, 16^th March 2020. 

Bank Nifty Option Front

Bank Nifty has given closing at 25166.45 on spot on 13^th March 2020. On the options front, maximum Put open interest was at 21,000 followed by 22,000 levels, while maximum Call OI was at 27,000 followed by 26,000 levels. Major addition in calls has been seen at 27000.

 

Change in Open Interest Bank Nifty

Trading Range Of Bank Nifty

Now time to find out the trading range of the bank nifty. For this purpose, we need to look for the highest call OI Row and Highest Put OI Row on the option chain of the Bank Nifty. Options data indicated a trading range between 22,000 and 26,000 levels.

1. Highest Call at 27,000. 

2. Highest Put at 21,000. 

3. Pivot Level at 25,000.

Open Interest Position Bank Nifty

Highest call acts as the highest resistance and highest put acts as the highest support for the Nifty and bank nifty. Pivot level is the level that bulls and bears don’t want to let it go easily. Tug of the war goes around the pivot level between bulls and bears generally.

Trading Range Of Nifty

Nifty has given closing at 9955.20 at spot on 13^th March, 2020. On the options front, maximum Call OI was at 11,000 and then 10,500 levels while maximum Put OI was at 9,000 and then 9,500 levels.

Options OI data lay scattered at various strike prices as many Put writers got trapped in the recent market fall. Even unwinding pressure kept the Street under pressure. Call writing was seen at strike price 9,500 while there was Put writing at 8,500 and then 9,000 levels, sliding lower day by day with lower market range. The options data indicated a shift in the wider trading range 9000 to 10,500.

Change in Open Interest Nifty

1. Highest Call at 11,000. 

2. Highest Put at 9,000. 
3. Pivot Level at 10,000.

Open Interest Position in Nifty

India Vix

India VIX closed at 51.47 level with 25.05% gain. A higher VIX beyond 50 level suggested that volatile swings could continue in the market. Volatility has to cool down from current multi-year-high levels and only then the Indian market could see stability and have a smooth ride. It is sustaining above the maximum on Box Plot into outlier data on the daily scale and thus volatile swings may continue in the coming days. If you wonder what Box Plot is and how it works, you can check here details.

Box Plot VIX

Nifty and Bank Nifty Trend Cycles

Bank Nifty Trend Cycles

Nifty Trend Cycles

Conclusion:

The OI scattered here and there that indicates volatility will be there in the market. VIX started rising again indicates the volatility may rise with bearish sentiment. Tend cycles indicates weakness in both indices.

Due to high volatility, the volume in the market has become almost 1/4th of the original. This indicates no stability in the market as of now.

Disclaimer: The analysis has been prepared for informational and educational purposes only. It is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.