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Will Nifty surpass 18000? ATM Call of 18000 data suggests otherwise

Commentary:The Nifty found some positive traction and headed to test its highest Call base of 18000 before Diwali. Festive cheer continued on Dalal Street this week as the Nifty managed to zoom almost 350 points from the bottom with cement, reality and capital goods stocks performed better.

Major Option activity (Weekly):

Major Call OI change in today’s session: 18000 (30.35 lakh), 18100 (21.2 lakh) and 18200 (12 lakh).

Major Put OI change in today’s session: 17900 (40.02 lakh) and 17950 (30.1 lakh).

Outlook:In recent few days, the volatility index has cooled off as the Nifty reverted from 17650. FIIs continued to be net sellers, which is likely to limit positive momentum on upsides. For today’s weekly expiry, aggressive Call writing is placed at ATM strike of 18000, which now commands almost 1.32 crore shares in OI. Historically, the Nifty has failed to violate such high quantum of OI and traded in a range. Today being the weekly option expiry, we feel the Nifty should find a hurdle above 18000 and we may see limited upsides from current levels. Hence, it is advisable to adopt a cautious stand in the Nifty from a weekly expiry perspective and buy ATM Put options to hedge on the long positions.