F&O expiry: Here's what the options data suggest for Nifty, Bank Nifty

"From the options perspective, aggressive Call writing was seen at Out of the Money (OTM) Call strikes with 19800 strike holding more than 1.1 crore shares moving into settlement week. At the same time, Put open interest remains relatively low due to sharp declines seen last week. Hence, closure among Call strikes should be closely watched for the renewal of the trend," ICICI Direct Research said in a note.

Going forward, analysts at ICICI Direct Research expect Nifty to hold strong support at around 19,500 followed by a healthy consolidation in the broad range of 19,500-20,000 in current expiry week. The brokerage recommended investors use dips as an opportunity to buy.

Analysts expect weakness to persist in the market amid cautiousness ahead of the monthly F&O expiry this week.

"Indices could not hold on to their Positive momentum from the first week of the September series. As the series progressed, Nifty gave away 50 percent of its gains (of the rally from 19,250-20,200), while underperformance from Bank Nifty continues," said Gaurav Arora, Derivatives Analyst at Religare Broking.

The Nifty Bank index settled at 44,624.20, down 141.90 points or 0.32 percent. Analysts expect a pause in current selling and supportive efforts to emerge in 44,000-44,200 zone. However, the index needs to form a higher high-low on daily chart to indicate a pause in downward pressure and meaningful reversal, as Thursday's high at 45,200 would act as an immediate hurdle.

"Going forward, we believe the indices might spend some time around these levels before making any meaningful moves. Since we are into the last week of the series, generally indices consolidate for rollover activity to pick up," Arora said.

With Bank Nifty attracting Shorts to the tune of 30 percent odd, Arora believes 45,200 should act as a major hurdle. "Expect any sizable recovery only above that. For Nifty, 19,800-19,900 might act as resistance," he said.

"Indices might continue to trade in a range, with Supply emerging at higher levels. Range for Nifty: 19,550-19,850 and Bank Nifty: 43,800-45,200," Arora noted.

According to Kunal N Kamble, Senior Technical Research Analyst at Bonanza Portfolio, the outlook for the September expiry points towards a range between 44,500 and 44,700 levels.

"After a breakout from the Symmetric Pattern on September 7th, 2023, Bank Nifty experienced a substantial rally, surging by approximately 3.27 percent as anticipated by the pattern. On September 18, 2023, however, the negative price action confirmed a short-term bearish trend, marked by a gap-down opening. Notably, near the breakout level, Bank Nifty encountered significant buying pressure, suggesting that the 44,500 level is serving as robust support. Conversely, on the upside, 45,000 is expected to act as formidable resistance in the forthcoming days," Kamble said.

In the realm of options, the 44,500 Put Option holds the highest Open Interest (OI), followed by the 44,000 Put Option, while on the Call side, the 45,000 Call Option boasts the highest OI, trailed by the 44,700 Call Option. Currently, the Max Pain level is seen at 44,700.

Foreign portfolio investors were net sellers at Rs 2,333 crore on Monday, while DIIs bought shares worth Rs 1,579 crore in the cash segment. FIIs have sold index futures worth Rs 1,466 crore, while in index options, they bought Rs 919 crore. In stock futures segment, they bought Rs 2,339 crore.

Balaram Chini, Canara Bank, Granules, Hindustan Copper, and Indiabulls Housing Finance were on the F&O ban list during today's session.

Meanwhile, the dollar hovered near 10-month highs against a basket of major currencies, supported by US bond yields scaling 16-year peaks, while the yen tiptoed deeper into the intervention danger zone.

The US dollar index touched its highest since November at 106.1.

"The upbeat economic data, hawkish Federal Reserve rhetoric, and a budget deficit to be financed by borrowing have pushed the 10-year Treasury yield up more than 45 basis points in September to top 4.5 percent for the first time since 2007," said Anuj Gupta of HDFC Securities.