Nifty and Bank Nifty Option Chain Analysis for Sept Exp

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Hello guys, I hope you are doing safe trading in this highly volatile market. In my last Nifty index analysis, I shared that the market is highly volatile and we should trade with proper risk management. To understand the current scenario Nifty option chain is good tool to analyse market participants activity.

Before going further in Nifty option chain analysis, let’s discuss some factors which are playing major role in this downward journey in Nifty Index.

Today we saw huge volatility in the market. The nifty index broke all the supports I shared on Twitter yesterday.

Sentiments are totally weak due to global and domestic concerns. Attach on Saudi refineries is a big concern in terms of crude. Crude is an important commodity, accounts India’s 25% of overall import. Increase in crude price will widen our trade deficit, which impacts our current account deficit.

US-China trade war still going on. China’s industrial growth rates fall to 17 years low affected by a slump in its manufacturing sector.

Concerns about Slowdown in the economy is boosting these weak sentiments. Most of the sectors are in red especially the auto sector which is struggling for some good numbers.

FIIs were net buyers in the first half of September but in the last 2 days sold almost 1500 Cr in the cash market. There are many other concerns too which are playing major role in this downward journey.

Technically Nifty index is trading below its 200 Day simple moving average which indicated a downtrend will continuous in short to the medium term. Before going on Nifty option chain analysis, Let’s look at the nifty index chart.

Nifty index chart

Nifty Index

W can see on chart that nifty index formed a triangle pattern on the daily chart. Yesterday on Twitter I shared that a breakdown or breakout will lead to further levels.

Today we got that breakdown with good volumes. Although Volumes are not that high, but indicating a weakness in the index. 11800 is a strong support level and Nifty index is trading almost this crucial level.

Now if tomorrow also we get this type of downside movement then more downside levels will open. The nifty index may go till 10000 too. So keep your positions with a proper hedge.

Let’s look at the Nifty option chain and try to analyse open interest.

Nifty Option chain analysis

Nifty Option Chain
26th September Expiry ( monthly Expiry)

Based on nifty option chain data, 11000 CE & 11200 CE are holding huge Open Interest, Giving as resistance levels. First resistance is 11000 and the second resistance is at 11200.

On the put side, 10800 PE & 10600 PE holding huge Open Interest. Giving the first support level is 10800 and second support level is 10600.

If you look at the PCR, Pcr at 10800 is 4.64 indicating 10800 a strong support level. PCR need to come down to 1.8 for the next support level.

Keep one thing in mind. Like every data, PCR also has some limitations. It can tell you the participants activity on a particular strike, but as you know participants behaviour is not constant, so this data can change anytime. You have to look more closely if you are following just PCR or Nifty option chain to track traders activity.

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So based on current data still, we can say that 10800 is a strong support level. Now whether nifty break this level or take some support, need to watch.

Now lets come to Bank Nifty Chart and Option Chain Analysis.

Bank Nifty Chart:

Bank Nifty index Chart

Same as Nifty index, Bank nifty too made a symmetrical triangle pattern. Although the bank nifty index gave a breakout on Friday but couldn’t sustain beyond that breakout.

We saw huge selling pressure in all the PSU BANKs today. AXISBANK & SBIN are the top losers, closed 4.5% and 3.8% negative respectively.

We saw short buildup in Bank nifty Future today. Bank nifty Future closed -2.6% and Open interest increased by 0.93%. The overall trend is still negative.

Implied Volatility is 23.07, increased by 3%. Historical volatility is at 27.60. As IV is low compared to HV. We can say Option premium is a little cheap. When IV is low, we should look for buying opportunities in options.

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Bank Nifty Option Chain analysis:

Bank Nifty option chain
26 Sep Expiry (Monthly Expiry)

Based on nifty option chain data, 28000 CE & 28500 CE are holding huge Open Interest, Giving as resistance levels. First resistance is 28000 and the second resistance is at 28500.

On the put side, 27500 PE & 27000 PE holding huge Open Interest. Giving the first support level is 27500 and second support level is 27000.

If you look at the PCR, Pcr at 27000 is 2.72 indicating 27000 a strong support level. PCR need to come down to 1.8 for the next support level.

Conclusion:

Based on Nifty and bank nifty option chain data, we can say that Nifty and bank nifty both are trading near to their crucial support levels. A breakdown will lead to further levels. So keep your positions with a proper hedge.


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DISCLAIMER: – we are not a SEBI research analyst. Views posted here only for educational purposes. There is no liability whatsoever for any loss arising from the use of this product or its contents. This product is not a recommendation to buy or sell, but rather a guideline to interpreting specified analysis methods.  This information should only be used by investors and traders who are aware of the risk inherent in securities trading.

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