Nifty is on track to hit 9,500. Check out why

Good amount of open interest addition was seen in 9500 call option, analysts say

After a consolidation of few days, our market opened on a cheerful note on back of positive global cues on Wednesday. The Nifty started moving higher right from the word go and managed to end the session a tad above 9400 mark. 

We witnessed meaningful long build-up in both Nifty (6.95%) and BankNifty (4.74%) for the first time in May series. The rally was supported by broad market participation. Among index gainers, Bharti Airtel, HUL, M&M and Kotak Bank added good amount of fresh longs; however, short covering move was observed in Aurobindo Pharma, RIL, HDFC and Cipla.

As far as index options are concerned, good amount of open interest addition was seen in 9500 call option, followed by huge unwinding in 9400 and 9300 strikes, indicating that the call writers were running to cover their shorts. On the other hand, 9300 and 9400 put options were active and added decent fresh positions. The highest open interest has also shifted from 9400 to 9500 call options; however it remains intact at 9300 put option.

Despite a remarkable up move, FIIs were net seller in index future segment with rise in open interest, indicating formation of short positions in index futures in today’s session. However, they bought good amount of stock futures, index call options and went short on index puts, which on the contrary is a positive sign for our market. 

Considering overall derivative activity, we are expecting the Nifty to trade in the range of 9300 to 9500; wherein we may see a continuation of optimism in individual stocks. Hence, traders are advised to trade with positive bias till Nifty holds its support zone of 9250 – 9300 level.

===================

The author is Technical and Derivative Analyst, Angel Broking