Trade setup for December 26: Top 15 things to know before the opening bell

Nifty Trade setup for December 26

The Nifty 50 saw consolidation for another session and closed flat with a negative bias on December 24, especially after the recent rally, but continued its higher-high-higher-low formation and sustained well above all key moving averages. According to experts, the consolidation may continue for one or two more sessions; however, they remain hopeful of an upward journey toward the 26,300 and 26,500 levels in the short term, given the positive technical and momentum indicators. Meanwhile, derivative data suggested that support has shifted higher to the 26,100–26,000 zone.

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

1) Key Levels For The Nifty 50 (26,142)

Resistance based on pivot points: 26,210, 26,237, and 26,281

Support based on pivot points: 26,124, 26,097, and 26,054

Special Formation: The Nifty 50 formed a small bearish candle with an upper shadow on the daily timeframe but held the previous day’s closing level, indicating a continuation of a breather for another session after the recent rally. The index sustained well above all key moving averages as well as the midline of the Bollinger Bands. The RSI also stayed above the reference line, though it dropped slightly to 57.18, while the MACD turned positive with the histogram rising further. The Stochastic RSI also sustained a bullish crossover. All this indicates continued strength with short-term consolidation.

2) Key Levels For The Bank Nifty (59,184)

Resistance based on pivot points: 59,397, 59,482, and 59,620

Support based on pivot points: 59,122, 59,038, and 58,900

Resistance based on Fibonacci retracement: 59,468, 60,895

Support based on Fibonacci retracement: 58,983, 58,635

Special Formation: The Bank Nifty formed a bearish candle with an upper shadow on the daily charts with lower volume and continued to hover around short-term moving averages and the midline of the Bollinger Bands, while sustaining above the falling resistance trendline, which has now turned into support. The index moved closer to 59,500 before closing 116 points lower. The RSI slightly turned bearish, but the Stochastic RSI still held above the reference line. The MACD maintained a bearish crossover, but the weakness in the histogram faded further for the fourth consecutive session. All this indicates limited downside and possible base formation.

3) Nifty Call Options Data

According to the monthly options data, the maximum Call open interest was seen at the 26,200 strike (with 1.34 crore 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 (1.11 crore contracts) and 26,400 strike (1.03 crore contracts).

Maximum Call writing was observed at the 26,200 strike, which saw an addition of 58.54 lakh contracts, followed by the 26,400 and 26,250 strikes, which added 52.13 lakh and 41.83 lakh contracts, respectively. The maximum Call unwinding was seen at the 25,800 strike, which shed 1.31 lakh contracts, followed by the 25,900 and 25,700 strikes, which shed 1.18 lakh and 77,475 contracts, respectively.

4) Nifty Put Options Data

On the Put side, the 26,000 strike holds the maximum Put open interest (with 1.52 crore contracts), which can act as a key support level for the Nifty in the short term. It was followed by the 25,500 strike (79.52 lakh contracts) and the 25,800 strike (76.9 lakh contracts).

The maximum Put writing was placed at the 26,000 strike, which saw an addition of 33.52 lakh contracts, followed by the 25,500 and 26,100 strikes, which added 23.77 lakh and 21.19 lakh contracts, respectively. The maximum Put unwinding was seen at the 25,400 strike, which shed 2.47 lakh contracts, followed by the 26,500 and 26,700 strikes, which shed 68,025 and 16,125 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 24.1 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 (19.91 lakh contracts) and the 61,000 strike (11.75 lakh contracts).

Maximum Call writing was observed at the 59,500 strike (with the addition of 3.95 lakh contracts), followed by the 61,000 strike ((2.84 lakh contracts) and 59,300 strike (1.87 lakh contracts). The maximum Call unwinding was seen at the 60,800 strike, which shed 1.6 lakh contracts, followed by the 60,100 and 59,600 strikes, which shed 1.46 lakh and 96,425 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 59,000 strike (with 13.79 lakh contracts), which can act as a key support level for the index. This was followed by the 59,500 strike (11.14 lakh contracts) and the 58,500 strike (9.86 lakh contracts).

The maximum Put writing was placed at the 59,100 strike (which added 45,010 contracts), followed by the 58,300 strike (37,310 contracts) and the 57,900 strike (37,520 contracts). The maximum Put unwinding was seen at the 58,000 strike, which shed 1.93 lakh contracts, followed by the 57,500 and 59,500 strikes, which shed 1.77 lakh and 1.74 lakh contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, fell to 0.98 on December 24, compared to 1.14 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, remained in the lower zone, falling 2 percent to hit a new closing low of 9.19. This signalled complacency in the market and comfort for bulls, but also indicated the need for alertness due to the possibility of sharp market moves.

10) Long Build-up (28 Stocks)

A long build-up was seen in 28 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (71 Stocks)

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

12) Short Build-up (69 Stocks)

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

13) Short-Covering (44 Stocks)

44 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: Sammaan Capital

Stocks removed from F&O ban: Nil