The markets showed some recovery during the middle of the week(due to positive global cues), after testing the 8800 support level on Monday. The volume followed an inverse relation with price as the market volume spikes have largely been caused by the sellers this quarter.
Open Interest Analysis
The combined open interest in all the three futures increased steadily through out the week with the price, indicating a building up of positions on the long side as we head into the expiry week .
Option Chain Analysis
After the expiry of weekly option on the 21st of May, significant open interest was built-up in the 9300, 9500 and 10000 call options for the monthly Nifty option expiring on the 28th of May.
Thus, 10,000, 9500 and 9300 present strong short term resistance to an upward move in Nifty. Similarly, significant open interest was built-up in the 9000 and 8800 put options which act as the short term support level going into the new week.
The overall interest of DII remained on the long side but at low levels. Also, the FIIs continued their selling streak and remained net sellers throughout the week. This is a bearish indication for the markets as we head into the new week.
For the research methodology and more information on Nifty 50 futures refer to this earlier blog on QuantInsti portal.
Disclaimer: All investments and trading in the stock market involve risk. Any decisions to place trades in the financial markets, including trading in stock or options or other financial instruments is a personal decision that should only be made after thorough research, including a personal risk and financial assessment and the engagement of professional assistance to the extent you believe necessary. The trading strategies or related information mentioned in this article is for informational purposes only.