Bank Nifty: Bank Nifty could leap 150 points today thanks to a positive sentiment

Mumbai: The unexpected surge in the put-call ratio (PCR) of the Bank Nifty weekly options, accompanied by an erasure of open call interest (OI) at key levels, increases the likelihood that the The index increases by 150 points or more on July 5 due to short-term call and call charges and futures contracts.

Analysts expect traders to buy futures on Bank Nifty or that the 26500 call expires on July 5 in case of withdrawal at the opening or if the index opens flat.

Wednesday's PCR went from 0.7 to 1.26 a day earlier. Prior to Wednesday, option sellers were selling more options on Bank Nifty than the puts. Indeed, they felt that the odds of a correction were higher than those of a hike and that this would allow callers to cash out the premiums paid by buyers. ; options.

However, this changed on Wednesday when traders sold a large number of puts in addition to covering short buying positions, a sign that they expect the company to buy. index increases again.

The 0.88% rise in Bank Nifty on Wednesday at 26433.95 was mainly driven by HDFC Bank (up 1.5%) and partly by Kotak Mahindra (0.7%) which holds a significant weight in the index of 12 members.

Analysts said the sentiment for HDFC Bank was rising due to the imminent institutional placement of its shares. The stock holds a weighting of 33 percent in the Nifty Bank.

"The odds of a rise in Bank Nifty seem higher than in the other direction because of the stock options," said Hemant Nahata, derivatives badyst at L & # 's 39; IIFL. Chandan Taparia, badyst, Motilal Oswal Securities, agrees. "We could see a follow-up tomorrow or even a short cover," Taparia said.

However, badysts advise to make a bullish spread on Bank Nifty options rather than futures or options buying to conservative traders to hedge in the event of a reversal of the index.

The addition of significant put was seen between 26100-26400 strikes on Wednesday. A short coverage was observed in the calls of the week 26300-26500 and even at the 26800 call. The range for the options expiring on July 5th is 26200-26500. A break in this range is considered likely.