Nifty 50 Expiry: Options market reflects 22,700 level to be crucial

Equity markets opened higher on Thursday and had continued their upward momentum by noon. The benchmark Nifty 50 and the Sensex were trading 0.67% higher at 12:07 p.m. with the Nifty 50 index, which has its expiry on Thursday, trading at 22,750.

Options data reveal 23,000 as key resistance level

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 2.33 crore at this strike. The change in open interest for the strike stood at 1.29 crore at 12:07 p.m. On the downside, the market is reflecting support at the 22,700 level with the Put options at this strike having an open interest of 1.76 crore at the time of writing. The change in open interest stood at 1.67 crore.

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 significantly above its 21-period and 50-period exponential moving averages (EMAs) indicating bullishness. The index also reflected a put-call ratio (PCR) of 1.11 which indicates the sentiment is neutral. 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 sometimes even above 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 0.65% on Thursday to 21.32. As the market moves towards the election results day, volatility is expected to rise.

Index constituents

HDFC Bank, which constitutes 11.48% of the index, was trading 0.95% higher on Thursday while Reliance Industries, which has a weight of 9.96%, was trading 0.53% higher. Other constituents of the index like ICICI Bank and Infosys were trading higher by over 1%. Larsen & Toubro was trading higher by 2.66%.