Trade setup for December 4: Top 15 things to know before the opening bells

Nifty Trade setup for December 4

The Nifty 50 remained under pressure for the fourth consecutive session, declining 0.2 percent with continued weakness in momentum indicators. However, it defended the 20-day EMA (25,970) and the midline of the Bollinger Bands (i.e., 20 SMA – 25,940) on a closing basis on December 3. If the index convincingly falls and sustains below these levels, bears may gain strength and drag it toward 25,840 (last Wednesday's low). In case of a rebound, 26,070 and 26,150 are the levels to watch, according to experts who advised caution.

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

1) Key Levels For The Nifty 50 (25,986)

Resistance based on pivot points: 26,048, 26,090, and 26,157

Support based on pivot points: 25,914, 25,873, and 25,806

Special Formation: The Nifty 50 formed a small bearish candle with upper and lower shadows, resembling a high-wave or Doji-type candlestick pattern on the daily timeframe, indicating volatility and indecision among bulls and bears. The index still held above the 20- and 50-day EMAs and the midline of the Bollinger Bands, but the momentum indicators remained weak, with the RSI at 53.56, and the Stochastic RSI and MACD maintaining bearish crossovers, while the histogram continued to sustain below the zero line. All of this indicates caution for the near term.

2) Key Levels For The Bank Nifty (59,348)

Resistance based on pivot points: 59,416, 59,532, and 59,719

Support based on pivot points: 59,043, 58,927, and 58,740

Resistance based on Fibonacci retracement: 59,442, 60,847

Support based on Fibonacci retracement: 59,000, 58,650

Special Formation: The Bank Nifty fell below 59,000 intraday but recouped all losses and closed above the mark with a gain of 74 points, accompanied by above-average volumes. The index formed a bullish candle with a lower shadow on the daily charts, indicating buying interest at lower levels. As a result, it continued to sustain above all key moving averages as well as the midline of the Bollinger Bands, which is positive. The RSI rose to 62.62 but remained below the reference line, while the Stochastic RSI maintained a bearish crossover. The MACD also turned bearish with mild weakness in the histogram. All of this indicates that consolidation may continue in the short term.

3) Nifty Call Options Data

According to the weekly options data, the 26,000 strike holds the maximum Call open interest (with 94.33 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 (93.89 lakh contracts) and 26,200 strike (89.22 lakh contracts).

Maximum Call writing was observed at the 26,000 strike, which saw an addition of 52.09 lakh contracts, followed by the 26,500 and 26,100 strikes, which added 35.95 lakh and 31.10 lakh contracts, respectively. There was hardly any Call unwinding seen in the 25,400-26,900 strike band.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 25,500 strike (with 89.1 lakh contracts), which can act as a key support level for the Nifty in the short term. It was followed by the 26,000 strike (69.27 lakh contracts) and the 25,900 strike (60.5 lakh contracts).

The maximum Put writing was placed at the 25,900 strike, which saw an addition of 32.92 lakh contracts, followed by the 25,500 and 25,950 strikes, which added 25.37 lakh and 22.7 lakh contracts, respectively. The maximum Put unwinding was seen at the 26,200 strike, which shed 8.89 lakh contracts, followed by the 26,150 and 26,050 strikes, which shed 3.53 lakh and 3.36 lakh contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the maximum Call open interest was seen at the 60,000 strike, with 12.98 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 59,500 strike (10.07 lakh contracts) and the 58,500 strike (9.26 lakh contracts).

Maximum Call writing was observed at the 59,500 strike (with the addition of 4.4 lakh contracts), followed by the 59,000 strike (59,010 contracts) and 60,500 strike (40,320 contracts). The maximum Call unwinding was seen at the 58,500 strike, which shed 3.64 lakh contracts, followed by the 60,000 and 60,600 strikes, which shed 49,805 and 14,140 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the 58,500 strike holds the maximum Put open interest (with 13.48 lakh contracts), which can act as a key support level for the index. This was followed by the 59,500 strike (12.73 lakh contracts) and the 59,000 strike (12.59 lakh contracts).

The maximum Put writing was placed at the 59,500 strike (which added 5.78 lakh contracts), followed by the 59,000 strike (75,670 contracts) and the 59,100 strike (54,425 contracts). The maximum Put unwinding was seen at the 58,500 strike, which shed 7.55 lakh contracts, followed by the 60,000 and 59,700 strikes, which shed 99,680 and 58,520 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 0.85 on December 3, compared to 0.94 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, which measures expected market volatility, remained supportive for bulls as it stayed well below all key moving averages and closed at 11.21 with a 0.13 percent loss, indicating lower uncertainty going ahead.

10) Long Build-up (18 Stocks)

A long build-up was seen in 18 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (74 Stocks)

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

12) Short Build-up (97 Stocks)

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

13) Short-Covering (22 Stocks)

22 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