F&O manual: Options hint at struggle as Nifty briefly tests 19,300

The Indian equity market started the week on a negative note amid weak global cues. At mid-day August 14, the indices were trading in the red but were off the day’s low, with metals down nearly 2 percent and realty a percent.

At noon, the Sensex was down 192.87 points, or 0.30 percent, at 65,129.78, and the Nifty at 19,357.40, down 70.90 points, or 0.36 percent. About 1,216 shares advanced, 1,938 shares declined and 118 remained unchanged.

The bars reflect the change in open interest (OI) during the day. The red show call option OI and the green put option OI.

The options data showed struggle at 19,300, with put and call options writers taking straddle positions, a strategy of holding a position in both a call and put with the same strike price and expiration date. Strong resistance could be seen at 19,400 followed by 19,500 and 19,800.

In the holiday-curtailed week, the Nifty would have crucial support at 19,300, which if breached, would decisively weaken the trend to trigger for fresh downward slide further ahead with the next major support visible way down near the 18,800 zone. “On the upside, we have 19600 levels as the near-term resistance barrier which needs to be breached above for further continuation of the upward move with conviction. The support for the day is seen at 19200 levels while the resistance is seen at 19550 levels,” added the brokerage firm.

In the truncated week, the crucial support is at 19,300, which if breached, would decisively weaken the trend and trigger a fresh slide, with the next major support way down near 18,800, brokerage house Prabhudas Lilladher said.

“On the upside, we have 19,600 levels as the near-term
resistance barrier which needs to be breached above for further continuation of the upward move with conviction. The support for the day is seen at 19,200, while the resistance is seen at 19550 levels,” the brokerage firm said.

The market will be closed on August 15 for Independence Day.

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Bank Nifty

In the previous week, the banking index moved with a weak bias and struggled to go past 45,000. Heavy profit-booking in the last two sessions, pushed Bank Nifty below the important 50-day exponential moving average of 44,600.

As per analysts, Bank Nifty, which has the highest weight in the Nifty, will trade cautiously, with downside movement expected till 43,300, which is the next major support. For the bias to improve, the index needs to cross above the important zone of 44,400 for further upward move.

Among individual stocks, CUB, Muthoot Finance and Jindal Steel saw a bearish set-up, while PVR Inox, Auro Pharma, and NMDC saw a long build-up.

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