The Nifty staged a smart recovery on Thursday after three days of consolidation. It ended 71.6 points higher at 8,179.50. Derivative data suggests that Nifty is set to breach 8,200 level on Friday.
Nifty calls of 8,200 and 8,300 strikes have shed open interest by 2.2 lakh and 2.4 lakh shares to 50.2 lakh and 48.7 lakh shares respectively. Reduction of open interest in 8,200 and 8,300 calls suggests that traders believe 8,200 to be taken out on the higher side in the near term.
Similarly on the put side 8,000, 8,100 and 8,200 strike puts have added open interest between 2 lakh to 2.5 lakh shares, indicating growing confidence among traders that Nifty is heading for higher levels.
Overall Nifty puts and calls have added 1.8 lakh shares to open interest, keeping the put-call-ratio steady at 1. A PCR of more than 1 is an indicator of bullish outlook for the market.
On the other hand, Nifty futures have added open interest by 7.7 lakh shares and the premium in Nifty futures fell to 7.5 points from 13.5 points earlier. This reduction futures premium however suggests that the open interest addition might have been on the short side.
India VIX or the volatility index has shed 3.1 per cent to end at 17.17 implying growing confidence among investors to build bullish bets.
Among individual stocks India Cements and Tata Motors are expected to extend gains with addition of more bullish bets.