Trade setup for December 17: Top 15 things to know before the opening bells

Nifty Trade setup for December 17

The benchmark Nifty 50 failed to consistently hold the psychological 26,000 zone and closed 0.64 percent lower on December 16. The index was unable to give a strong close above the falling resistance trendline and, on Tuesday, finished below short-term moving averages, signalling the inability of bulls to defend the 26,000 level and the continuation of a lower high–lower low formation. Hence, as long as the index trades below 26,100, consolidation may continue with support at 25,750–25,750. However, a convincing move above this level could drive the index toward the 26,200–26,300 zone, experts said.

Here are 15 data points we have collated to help you spot profitable trades:

1) Key Levels For The Nifty 50 (25,860)

Resistance based on pivot points: 25,948, 25,982, and 26,038

Support based on pivot points: 25,836, 25,801, and 25,745

Special Formation: The Nifty 50 formed a bearish candle on the daily timeframe, with the continuation of a lower high–lower low structure, signalling nervousness in the market. In addition, the index dropped below short-term moving averages (10- and 20-day EMAs) as well as the midline of the Bollinger Bands, and is trading near the 50 percent Fibonacci retracement (of the rally from the November 7 low to the December 1 high). The RSI declined to 47.82, while the MACD maintained a bearish crossover with weakness in the histogram. All this indicates increasing caution and short-term weakness.

2) Key Levels For The Bank Nifty (59,035)

Resistance based on pivot points: 59,253, 59,340, and 59,481

Support based on pivot points: 58,971, 58,884, and 58,743

Resistance based on Fibonacci retracement: 59,453, 60,866

Support based on Fibonacci retracement: 58,643, 58,296

Special Formation: The Bank Nifty also reported a bearish candle on the daily charts, closing below short-term moving averages with a 0.7 percent loss, indicating weakness amid ongoing consolidation. Momentum indicators showed nervousness, with the RSI declining to 51.55 with a negative crossover, while the MACD remained below the reference line with weakness in the histogram. All this indicates continued consolidation with a bearish bias in the short term.

3) Nifty Call Options Data

According to the weekly options data, the maximum Call open interest was seen at the 26,000 strike (with 76.6 lakh contracts). This level can act as a key resistance level for the Nifty in the short term. It was followed by the 26,500 strike (53.9 lakh contracts) and 26,100 strike (51.25 lakh contracts).

Maximum Call writing was observed at the 26,000 strike, which saw an addition of 47.73 lakh contracts, followed by the 25,900 and 26,300 strikes, which added 40.82 lakh and 35.6 lakh contracts, respectively. There was hardly any Call unwinding seen in the 25,200-26,700 strike band.

4) Nifty Put Options Data

On the Put side, the 25,500 strike holds the maximum Put open interest (with 46.98 lakh contracts), which can act as a key support level for the Nifty in the short term. It was followed by the 25,900 strike (36.36 lakh contracts) and the 26,000 strike (33.3 lakh contracts).

The maximum Put writing was placed at the 25,900 strike, which saw an addition of 17.67 lakh contracts, followed by the 25,500 and 25,300 strikes, which added 16.65 lakh and 13.92 lakh contracts, respectively. The maximum Put unwinding was seen at the 26,050 strike, which shed 1.82 lakh contracts, followed by the 26,400 and 26,150 strikes, which shed 30,825 and 24,075 contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the 59,500 strike holds the maximum Call open interest, with 18.16 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 60,000 strike (17.83 lakh contracts) and the 61,000 strike (10.54 lakh contracts).

Maximum Call writing was observed at the 60,000 strike (with the addition of 3.23 lakh contracts), followed by the 59,500 strike (2.77 lakh contracts) and 59,300 strike (2.74 lakh contracts). The maximum Call unwinding was seen at the 58,500 strike, which shed 52,885 contracts, followed by the 58,000 and 59,700 strikes, which shed 52,115 and 12,985 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 59,500 strike (with 16.8 lakh contracts), which can act as a key level for the index. This was followed by the 59,000 strike (13.31 lakh contracts) and the 58,500 strike (10.43 lakh contracts).

The maximum Put writing was placed at the 58,600 strike (which added 1.61 lakh contracts), followed by the 58,000 strike (97,580 contracts) and the 57,700 strike (39,165 contracts). The maximum Put unwinding was seen at the 59,500 strike, which shed 2.33 lakh contracts, followed by the 59,000 and 57,500 strikes, which shed 1.82 lakh and 80,360 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, dropped to 0.9 on December 16, compared to 1.18 in the previous session.

The increasing PCR, or being higher than 0.7 or surpassing 1, means traders are selling more Put options than Call options, which generally indicates the firming up of a bullish sentiment in the market. If the ratio falls below 0.7 or moves towards 0.5, then it indicates selling in Calls is higher than selling in Puts, reflecting a bearish mood in the market.

9) India VIX

The India VIX, also known as the fear gauge, continued to favour bulls, falling 1.83 percent to 10.06, the lowest closing level since October 7. However, sustaining at lower levels also signals the possibility of a sharp market move on either side.

10) Long Build-up (12 Stocks)

A long build-up was seen in 12 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (80 Stocks)

80 stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding.

12) Short Build-up (102 Stocks)

102 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions.

13) Short-Covering (17 Stocks)

17 stocks saw short-covering, meaning a decrease in OI, along with a price increase.

14) High Delivery Trades

Here are the stocks that saw a high share of delivery trades. A high share of delivery reflects investing (as opposed to trading) interest in a stock.

15) Stocks Under F&O Ban

Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.

Stocks added to F&O ban: Nil

Stocks retained in F&O ban: Bandhan Bank

Stocks removed from F&O ban: Nil