Open interest data hints at a consolidation in index

Nifty started the week marginally negative and the index traded within a narrow range throughout the day. Amidst stock-specific momentum, Nifty ended the day above 22100 with a loss of less than half a percent.
 
During last week, Nifty registered a new all-time high but momentum has been lacking since the midcap index has entered a consolidation phase. In Nifty, the recent up move has been because of some short covering and we have not seen significant long build-up. FIIs have reduced some of their net short positions and their ‘Long Short Ratio’ now stands around 44 percent. In the options segment, the coming February series data hints at a support around the 22000 mark, where high open interest of around 68 lakh contracts is seen, while a similar quantum of open interest is seen in 22200 and 22300 call options which seems to be the resistance zone. The 20 DEMA support is placed around 21930 and hence, looking at the data it seems that the index would consolidate within this broad range for now. Only if the index gives a breakout beyond the range, coupled with the unwinding of positions in the above options would lead to a directional move before expiry. Hence, traders are advised to trade with a stock-specific approach in the near term.