Historical volatility (HV) fell sharply and is hovering around all time low. The Nifty VIX, a fear indicator, is also trading at its lowest
level. The implied volatilities (IVs) also fell drastically. The IVs of put options are significantly lower at 18.75% in the last few sessions. Above data indicate range-bound movement in this week. Rising open interest in OTM put-option strikes indicates support around 5200 and 5100 levels.

However, addition in the OTM 5300 and 5400 strike call options, along with low volatility, indicates that the Nifty is likely to face resistance around this level. The continuous rise in ATM and OTM put-option strikes prompted a high PCR level which is around 1.32.

The highest open interest was seen in the 5200-strike put indicating immediate support. Market witnessed long closure on Tuesday, as the Nifty open interest has fallen by 2% with a 1% fall in the Nifty Index and finally closing at a premium of 3 points.

Most of the derivative-listed stocks have shown similar pattern indicating profit-booking. The Nifty is expected to remain within the broad range of 5200-5400 levels, with the 5320 level serving as a resistance. Index may find intermediate support around 5200 levels. On a sector-specific basis energy heavyweights and software services are likely to see long closures. Among heavyweights, Infosys, TCS, RIL and ONGC added long positions last week. We expect long closures in these stocks during this week. Without a major trigger, we don’t expect a sharp rise in the index. The Nifty is likely to trade in a range of 5200-5400 levels over the week.