F&O Alert: These 3 Nifty stocks trade with high PCR; check key levels here

May F&O expiry strategy: In general, stocks with high Open Interest based Put Call Ratio (PCR) tend to trade with a positive bias or find strong support in case of dips.

Even as stock market in India trade at record high levels, and talks of a post-election rally buoy sentiment amid hopes of clear mandate for the incumbent government, volatility in this penultimate week before the results of Lok Sabha elections cannot be ruled out owing to the monthly futures & options (F&O) expiry.

Technically, the NSE Nifty 50 index has recovered smartly from a mid-month correction, and is up 5.2 per cent (1,136 points) from its recent low of 21,821 hit on 13th May. The Nifty hit a record high at 23,026 on Friday, 24th May, 2024.

Ahead of the monthly expiry, the Nifty open interest (OI) based Put Call Ratio (PCR) stands at 1.03. Simply put, a PCR above 1 means presence of higher open positions in Puts as against Calls. Whereas, in case, the PCR is below 1, it shows higher OI in Calls versus Bears.

Despite higher OI in Puts, it does not mean a bearish outlook for the market. On the contrary, higher open positions in Puts suggest presence of likely support for the underlying index/ stock with strong hands (Put writers) at play.

As such, the Nifty 23,000 Strike Price has a sizeable OI both at the Put and Call side, suggesting likely tussle between the bulls and the bears around this landmark. Overall, the Nifty 23,500 Call has the highest OI, suggesting that traders do not expect the Nifty to move past this level in the May expiry.

On the downside, significant OI is seen at 22,500 Put, with notable OIs at 22,800 and 22,900 Puts. The option premium data suggests likely support in the range of 22,750 - 22,800 for the Nifty.

Meanwhile, here are 3 F&O stocks with a PCR in excess of 1. These key technical levels can help you plan your trades at these counters.

Mahindra & Mahindra

Last close: Rs 2,576

Support: Rs 2,510 - Rs 2,500

Potential Upside: Rs 2,620 - Rs 2,650 

Mahindra & Mahindra stock has witnessed a huge 36 per cent rally since the start of fiscal year FY25. The stock is seen trading with a bullish bias across time-frames, with key momentum oscillators also in favour of an upside. 

The May series options data suggests likely support for the stock around Rs 2,500 - Rs 2,510. On the upside, the stock can potentially jump to Rs 2,620, or stretch the gains to Rs 2,650. Sustained trade above Rs 2,650 can trigger a sharp short-covering rally.

Cipla

Last close: Rs 1,487

Support: Rs 1,470 - Rs 1,440

Resistance: Rs 1,510

Cipla stock is seen trading close to the Rs 1,500 Strike Price, wherein stands the higher OI among Calls. The stock is likely to face considerable resistance around Rs 1,510 levels. Break and sustained trade above the same, will force the Calls Writer to cover short positions, and in turn lead to fresh upside at the counter.

On the downside, significant OI in Puts is seen at Rs 1,480 and Rs 1,440 Strikes. The options premium pricing suggests likely support for Cipla stock around Rs 1,470 - Rs 1,440 range till the May F&O expiry.

Cipla has witnessed an intra-month recovery of 14.2 per cent. The medium-term chart suggests that the bias for the stock is likely to remain favourable as long as it holds above Rs 1,420.

Eicher Motors

Last close: Rs 4,880

Support: Rs 4,800

Upside Potential: Rs 5,000

The options data for May month expiry for Eicher Motors stock reveals that bulls are attempting to create support for the stock around Rs 4,800 levels. Highest OI among Puts, however, is seen at 4,500 Strike Price. On the upside, Eicher Motors stock needs to trade consistently above Rs 4,950 for further gains to emerge. The stock can potentially rally past the Rs 5,000-mark in the May expiry itself.

Eicher Motors has surged nearly 34 per cent from the lows of the month. Key momentum oscillators remain clearly in favour of the bulls, both on the daily and the weekly charts.