NIFTY50 Expiry: Options market reflects 23,000 as key resistance level for NIFTY

Equity markets opened higher on Thursday and continued the bullish momentum as uncertainty surrounding the government formation abated with the BJP-led National Democratic Alliance (NDA) coming back to power for the third term. The benchmark Nifty 50 and the Sensex were trading 0.6% higher at 12:01 p.m. with the Nifty 50 index, which has its expiry on Thursday, trading at 22,755.85.

23,000 key resistance as per OI The options market is currently factoring in a resistance at the 23,000 level with the highest open interest on the call side amounting to 2.37 crore at this strike. The change in open interest for the strike stood at 1.13 crore at 12:01 p.m. On the downside, the market is reflecting an immediate support at the 22,500 level with the Put options at this strike having an open interest of 96.6 lakh at the time of writing. The change in open interest stood at 62.5 lakh.

The max pain of Nifty 50 stood at 22,700 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.

Chart check On a 15-minute chart, the index continues to trade above its 21-period and 50-period exponential moving averages (EMAs) indicating bullishness. The index also reflected a put-call ratio (PCR) of 0.64 which indicates the market is slightly oversold at the moment. PCR is the ratio of the number of puts to the number of calls of an asset. It is noteworthy that in extreme downward market movements, the PCR has gone as low as 0.5 or sometimes even below that level only to revert slightly to the mean.

India VIX, an index that reflects the anticipated volatility in the market over the next 30 days, fell 6.7% on Thursday to 17.62. On an intraday basis, the index had hit a one-month low of 16.66 with the uncertainty surrounding election results out of the picture.

HDFC Bank, which constitutes 11.6% of the index, was trading 0.21% higher on Thursday while Reliance Industries, which has a weight of 9.75%, was trading 0.32% higher. ICICI Bank was trading 0.33% lower while Infosys was trading up by 1.51%. Larsen & Toubro was trading over 2% higher.