5800 Call sees highest fresh addition - ICICIdirect

Selling pressure got further magnified during the week as the Nifty slipped by 4%, Bank Nifty by 5% and CNX Midcap by 6%. The selling pressure was triggered after the monetary policy announcement and withdrawal of support by the DMK from the Union government. Relatively low leverage in stock futures open interest in the settlement week may restrict the volatility during the truncated settlement week

The Volatility Index (India VIX) spent the better part of the week above the 200 DMA of 16.2 and kept the index jittery. In Friday's trade, the fear gauge cooled off to 15.5. A fresh up move above its 200 DMA of 16.3 may cause the selling pressure once again

Last week, noteworthy additions were observed among ATM and OTM Call strikes of the March series. The highest fresh addition was seen at the 5800 Call strike suggesting major hurdle on the higher side. At the same time, most Put strikes saw closure of positions

Nifty: Due to continuous writing seen among OTM Call strikes, we expect 5800 to remain the key resistance on the higher side. At the same time, immediate and crucial support for the Nifty is placed at 5600, below which selling pressure may extend sharply towards 5450-5500

Bank Nifty: The banking index has a major hurdle at 11500 where Call strike added noteworthy open interest during the week. A move above these levels may trigger a round of short covering. On downsides, the Put base at the 11000 strike is expected to act as immediate support

Source : Equity Bulls

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