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Below is the Derivatives Weekly View By Dharmesh Shah, Head – Technical, ICICIdirect

Nifty

The Nifty remained under pressure as well and shed another 2% last week amid intensified FII selling pressure. The index remained largely around 17400 during the week and ended the series above its Put base of 17500. However, it gave up sharply again on Friday and erased all the gains of the last three months while testing 17000 levels.

From an options perspective, Put writers are finding it tough to hold their positions due to increased volatility and sharp declines. Currently the major Put base for the coming weekly settlement is placed at 17000 strike, which may work as an intermediate support. However, a breach of these levels may trigger downsides towards 16700 in the coming sessions. On the higher side, sustainability above 17500 would be crucial for fresh upward bias.

Bank Nifty

The Nifty ended the November F&O series with loss of almost 2% but the Bank Nifty declined almost 5% for the series clearly showing weakness as both private and PSU banks witnessed severe selling pressure. In the banking universe, midcap banks were the worst performers whereas least decline was seen in HDFC Bank, which fell almost 1.5%.

The Bank Nifty witnessed marginally higher rollovers compared to its three-month average. Most shorts were carried forward for the December series, which is likely to keep the index move in check. The Bank Nifty has started the new series with almost three year high open interest near 23 lakh shares and considering significant underperformance in banking, we believe fresh shorts were formed. Hence, fresh positive bias in the banking space should be formed only if there are some indications of short covering.

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