F&O Manual | Nifty dips in fear of volatility at monthly expiry from MSCI rebalancing

The benchmark Indian indices opened gap-up but slipped into the red amid volatility on the monthly expiry day on November 30. Bank Nifty sees selling pressure due to MSCI rebalancing, and analysts anticipate that the last hour could be highly volatile.

The BSE Midcap and Smallcap indices traded flat around noon. Tata Motors, Adani Enterprises, ICICI Bank, HDFC Bank and Asian Paints are among the top losers on the Nifty, while gainers include Hero MotoCorp, Eicher Motors, Apollo Hospitals, Divis Labs, and UltraTech Cement.

Around 12 noon, the Sensex was down 154.42 points or 0.23 percent at 66,747.49, and the Nifty was down 28.70 points or 0.14 percent at 20,067.90. About 1,556 shares advanced, 1,551 declined, and 110 traded unchanged.

Options data suggests that call writers dominate the day, with heavy call writing at the 20,100 and 20,150 strikes forming strong resistance. “The overall trend is likely to remain positive, and now it has to hold above the 20,000 zones for an uptrend towards 20,150, then 20,222 zones, whereas supports are placed at 19,950, then 19,850 zones,” Motilal Oswal Financial Services said.

MOFSL derivative strategy recommendation

Option Writing: Aggressive option writers can sell the 20,250 Call and 20,000 Put in pairs with double the stop loss.

Bank Nifty 

Bank Nifty’s options data shows strong resistance at 44,450 and 44,650 levels. “Bank Nifty is facing resistance at the 100 DMA at 44,444 and experiencing strong selling from there. With MSCI rebalancing today, the last hour could be highly volatile, and based on the price action, I expect it to be on the lower side,” said trader Shijumon Antony.

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