Nifty extended its recovery to the second straight day on Monday and ended 82.95 points higher at 7,872.25. The option open interest data suggests 7,800 is likely to act as a near-term support for Nifty.
Open interest (outstanding position) in 7,800 strike Nifty put now stands at 43.7 lakh shares compared to 29.6 lakh shares in puts. Higher open interest at 7,800 put indicates market participants are more optimistic of 7,800 to be held in the near term rather than being broken.
On the other hand, 7,900 and 8,000 strike calls have also added open interest with maximum concentration seen at 8,000 strike calls. This suggests that it will be difficult for Nifty to cross 8,000 in the near term as well. Hence the likely range for Nifty in the near term will be 7,800-8,000.
Similarly long unwinding was seen in the September Nifty futures as it shed 2.9 lakh shares in open interest with premium remaining at 2.95 points compared to 0.05 points earlier.
Overall Nifty puts have added 22.2 lakh shares to open interest compared to 12.2 lakh shares in calls, pushing the put-call-ratio to 0.94 against 0.93 earlier.
The India VIX or the volatility index increased 2.62 per cent to settle at 24.32 suggesting higher volatility prior to the US Fed's decision on interest rates, which will decide the fate of emerging market equities.
Among individual stocks Just Dial and Colgate Palmolive witnessed maximum addition of bullish bets; open interest in these stocks increased along with increase in their stock price.
On the other hand Page Industries saw addition of bearish bets as open interest in the stock increased 9 per cent along with 2.6 per cent fall in its price.