SENSEX Expiry: Options market reflects 75,400 level to be crucial

Equity markets opened lower on Friday but inched upwards later during the day. The benchmark Nifty 50 and the Sensex were trading flat at 12:04 p.m.

75,500 key resistance level for SENSEX

SENSEX, which has its expiry on Friday, traded at 75,439 at 12:43 p.m. The options market is currently factoring in a resistance at the 75,500 level with the highest open interest among closer-to-the-money call strikes amounting to 28.4 lakh at this strike. The change in open interest for the strike stood at 26.7 lakh. On the downside, the market is reflecting support at the 75,000 level with the Put options at this strike having an open interest of 26.1 lakh at the time of writing. The change in open interest stood at 23.6 lakh.

The max pain of Sensex stood at 75,400 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.

Chart check

On a 15-minute chart, the index continues to trade above its 21-period and 50-period exponential moving averages (EMAs) indicating a bullish sentiment. The index reflects a put-call ratio (PCR) of 0.86 which indicates a neutral sentiment.

PCR indicates neutral sentiment

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 1.8 or higher, only to revert slightly to the mean.

India VIX, an index that reflects the anticipated volatility in the market over the next 30 days, rose over 1% on Friday to 21.60. As the market moves towards the election results day, volatility is expected to rise.

Index heavyweights leading the charge

Among the major contributors among the index constituents, HDFC Bank was trading 0.92% higher on Friday while Larsen and Toubro was trading 1.31% up. Other constituents of the index like Bharti Airtel and State Bank of India were trading higher by 1.05% and 0.4%, respectively. UltraTech Cement was trading up by 1.2%.