On Tuesday, the Nifty rose as much as over 1% to 25,317.7 – the highest intraday level of 2025 so far – before the rally fizzled out and the index ended at 25,044.
“The market continues to witness a tug-of-war between the bulls and bears, with the Nifty struggling to sustain above 25,200, despite briefly crossing it on Tuesday,” said Sudeep Shah, head – technical and derivative research, SBI Securities.
Shah’s reference to bears is the traders who are aggressively selling or writing Nifty call option contracts of strike 25,200 on the expectation that the index will not cross this level. Option writers or sellers, typically seasoned traders, sell call options during uncertain times, and the levels at which they are active often act as a ceiling to rallies.
If too many traders sell calls at the same strike price, it creates strong resistance, as they may take measures – like selling stocks or futures – to protect their positions if the market moves higher.
“Call writers have been actively building positions at nearby strikes, reflecqting a capped upside view in the near term,” said Dhupesh Dhameja, derivatives research analyst at Samco Securities.Dhameja said the 25,200 strike continues to command the highest open interest on the call side, with 1.13 crore contracts, thereby acting as a major resistance.At the same time, put writers-traders who bet on an index or a stock staying above a certain level–are unwilling to cede ground.
The 25,000 put strike has seen substantial writing – 1.05 crore contracts – indicating a solid base around that level, said Dhamija.
“Put writers have shown notable confidence by adding aggressive positions near the current spot levels, signifying strong intent to defend support zones,” he said.
Nifty option strikes that have seen significant call and put writing may indicate the range within which the index is likely to trade for now.
Other derivatives indicators are also showing muted sentiment this week. The Put-Call Ratio (PCR) on Tuesday has dipped to 0.75 from 0.9 previously, suggesting a slightly negative sentiment, said Vipin Kumar, assistant vice president of derivatives and technical research at Globe Capital Market.
The PCR is a popular sentiment indicator in the market, comparing the volume of put options to call options traded in a day. The fall in PCR suggests bullish positions have reduced slightly, and market sentiment has turned a bit more cautious.
Shah said a close above 25,200 appears unlikely before Thursday’s monthly expiry, as traders remain cautious and fresh bullish positions are absent due to a lack of strong positive triggers.
