Bank Nifty Expiry: Options market reflects 52,500 level to be crucial

Equity markets opened higher on Wednesday and continued their positive momentum by noon. The benchmark Nifty 50 was trading 0.47% higher while the Sensex was trading 0.58% higher by 12:00 p.m. having hit fresh intraday record highs.

The Bank Nifty index, which has its expiry on Wednesday, hit a fresh all-time high of 52,957.95 on an intraday basis. The index was trading 0.57% higher to trade at 52,908.40 at 12:00 p.m.

The options market is currently factoring in an immediate resistance at the 53,000 level with the strike having an open interest of 52.6 lakh at 12:00 p.m. The change in open interest for the strike stood at 24.7 lakh.

On the downside, the market is reflecting a support at the 52,500 level with the Put options at this strike having an open interest of 62.5 lakh at the time of writing. The change in open interest stood at 41.8 lakh.

The max pain of Bank Nifty stood at 52,700 at the time of writing. The max pain theory shows the level at which option sellers are likely to have the least loss on expiry. However, it is noteworthy that this level is dynamic and keeps shifting when the market moves significantly in either direction.

On a 15-minute chart, the index traded way above its 21-period and 50-period exponential moving averages (EMAs) and reflected a put-call ratio (PCR) of 1.42 which indicates the market is considering the index to be slightly overbought. PCR is the ratio of the number of puts to the number of calls of an asset. It is noteworthy that in extreme upward market movements, the PCR has gone as high as 1.85 or sometimes even above that level.

India VIX, an index that reflects 14.45 on Wednesday.

HDFC Bank, which constitutes 29.42% of the index, was trading 0.32% lower on Wednesday while ICICI Bank, which has a weight of 23.33%, was trading 1.17% higher. Axis Bank was trading 0.05% higher while State Bank of India was trading higher by 0.55%. Kotak Bank shares were trading higher by 1.18%.