The Nifty ended 22.55 points higher at 7,868.5 on Thursday. However, the blue-chip index fell 1 per cent compared to its closing on the previous derivative expiry on August 27. Looking at the options open interest (outstanding positions) of the October series it seems that the likely range for Nifty will be 7,800-8,000 in the near future.
Open interest in the 7,800 strike October Nifty put option was highest at 32.6 lakh shares suggesting support for Nifty at 7,800 levels. After 7,800 strike 7,600, 7,500 and 7,400 strike put options also had significant open interest in range of 24 lakh to 32 lakh shares. Similarly, on the upside 8,000 is likely to act as an immediate resistance for Nifty as open interest in the 8,000 strike call option was at 23.6 lakh shares.
The put-call-ratio (PCR) stood at 0.93 compared to 0.95 earlier suggesting higher number of calls being added to the open interest compared to puts indicating a bearish outlook for the market. PCR is a sentiment indicator for the market. A PCR of more than 1 suggests bullish outlook for the market.
On the futures side, Nifty October futures have added 38.9 lakh shares to open interest but premium in the October future fell to 27.2 points from 42.8 points earlier suggesting addition of bearish bets.
Cues from September expiry:
The market wide rollovers on September expiry day stood at 74 per cent compared to average of 76 per cent in last three months. Rollover in Nifty futures alone was 60 per cent compared to last three months average of 64 per cent. The rollover cost (the cost involved in carrying forward the September Nifty future position to the October series) was 35 basis points compared to 53 basis points in the previous expiry. Lower rollover along with lower cost of carry in Nifty futures suggests bearish sentiment for the October series.
Among individual sectors, metals and mining stocks saw higher rollover of 79 per cent compared to 73 per cent in the previous month while cement and oil & gas stocks saw lower rollovers compared to last month.
Stocks like Coal India, Gail and ACC saw higher rollovers in the range of 76-79 per cent while M&M, Cairn India and UltraTech Cement witnessed lower rollovers compared to last month.