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Below The Quote On F&O Expiry note by Mr. Chandan Taparia, Vice President - Equity Derivatives & Technicals, Broking & Distribution, Motilal Oswal Financial Services Ltd.

Nifty index settled the March series with losses of 2.46% and it continued its losing streak for fourth consecutive series starting from December 2022 to March 2023. Recently index drifted towards 16828 zones but got stuck in a range of 400 points in between 16828 to 17224 zones from last twelve trading sessions. We are witnessing sustained selling pressure on bounce but even after that support based buying is intact which is not allowing market to further drift down. On weekly scale Nifty is in process to form an inside Bar or a Harami pattern which indicates that now bears are losing some grip and small follow up could lead for short covering bounce in the Indian market. Nifty requires a follow up move above 17071 zones to extend the bounce towards 17200-17350 zones at the beginning of new series.

India VIX has recently fallen from 17.36 to 13.32 in last ten trading sessions and such kind of market scenario is tough for Option buyers as VIX is cooling down and option premiums are declining fast due to the Option’s property of Time decay.

CBOE VIX at US is also decline with multiple attempt for DJIA to hold beyond 32500 zones which could give stability to US market.

FIIs long short ratio has seen some recovery from 8-9 to 15-18% which indicates about some short covering move from Global market participants.

Since it’s the beginning of the new series, Option data is scattered at various far strikes in monthly series. On Option front, weekly  Maximum Call OI is at 17000 then 17500 strike while Maximum Put OI is at 17000 then 16800 strike. Minor Call writing is seen at 17400 then 17500 strike while Put writing is seen at 17000 then 16900 strike. Option data suggests a broader trading range in between 16600 to 17500 zones while an immediate trading range in between 16800 to 17300 zones.

Bank Nifty Option writers made the most in the entire month as it settled the series with marginal losses of 100 points which is 0.23% at 39910 compared to Feb series close of 40001 levels. Bank Nifty remained resilient and fallen less as compared to Nifty index and giving an early sign of short term bottom process. Bank Nifty has recently formed low near to 38600 zones and forming higher support base near to 39250 zones. However we have seen huge OI build up in this index in this month from 38.50 Lakh to 58 Lakhs towards the close of series. Surge in 50% OI addition with marginal declines in price indicates mixture of long and short both and any decisive move could trigger a momentum in the market preferably or short covering spike. Bank Nifty needs to hold 39500 zones to extend this move towards 40500 zones.

Nifty pharma index settled the expiry on expiry move on flattish basis even after a decline in broader market. However major trend is negative but turn from key support indicates some bounce could be seen in this beaten down index mainly with buying in Drreddy, Auropharma, Alkem and Zydus Life. We have seen some short covering move in these stocks.

We have seen long built up in Capital Goods, Cement, Gold Finance and selective FMCG stocks while shorts were added in Metal and selective midcap F&O name. Stocks wise better positioning is seen in Ultracemco, Manappuram, JK Cement, Shree Cement, Indhotel, Hindunilvr, Siemens, Alkem, Cumminsind, Godrejcp and Drreddy.

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