Nifty Fin Service Expiry: Options market considers 23,500 as crucial level on expiry

Equity markets opened higher on Tuesday but lost some of its early morning gains by 12:00 p.m. The benchmark Nifty 50 and the Sensex were trading 0.08% higher by Tuesday noon.

The Nifty Financial Service index, which has its expiry on Tuesday, was trading 0.66% lower at 23,475.75 at 12:00 p.m. The options market is currently factoring in resistance at the 23,600 level with the open interest on this strike amounting to 1.11 crore. The change in open interest for the strike stood at 99.9 lakh at the time of writing.

On the downside, the options market is factoring in support at the 23,400 level with the open interest on this strike amounting to 67.2 lakh. The change in open interest stood at 46.2 lakh.

The max pain of Nifty Financial Services stood at 23,500 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. On a 15-minute chart, the index was trading below its 21-exponential moving average (EMA) and the 50-EMA.

India VIX, an index that reflects the anticipated volatility in the market over the next 30 days, fell 1.66% on Tuesday to 13.6.

The index reflected a put-call ratio (PCR) of 0.62 which indicates the market may be anticipating further upside after the near-term consolidation. PCR is the ratio of the number of puts to the number of calls of an asset. It is noteworthy that in extreme downward and upward market movements, the PCR may hit as low as 0.5 or as high as 1.8, respectively.

HDFC Bank was trading 1.13% higher on Tuesday while ICICI Bank was trading 1.86% lower. Axis Bank and State Bank of India were trading 0.99% lower each on Tuesday noon. Kotak Bank shares were trading lower by 2.98%.