Trade setup for December 8: Top 15 things to know before the opening bells

Nifty Trade setup for December 8

The benchmark Nifty 50 extended its uptrend for the second consecutive session, rising six-tenths of a percent on December 5. It climbed above all key moving averages, with a bullish crossover in the momentum indicator, which is positive. Friday's rally raised hopes for a move toward 26,300 in the upcoming sessions, especially after the bottom formation during the recent fall, which signalled the continuation of the higher high–higher low structure on the larger-degree timeframes. Above this, 26,500 is the level to watch, while support is placed in the 26,000–25,900 zone, according to experts.

Resistance based on pivot points: 26,208, 26,259, and 26,342

Support based on pivot points: 26,042, 25,990, and 25,907

Special Formation: The Nifty 50 formed a long bullish candle on the daily charts and traded above all key moving averages, signalling a positive bias. The RSI (60.21) and the Stochastic RSI showed a bullish crossover. The MACD inclined upward, though it remained below the reference line, while the weakness in the histogram faded. All this indicates continued bullish momentum and strengthening market sentiment.

2) Key Levels For The Bank Nifty (59,777)

Resistance based on pivot points: 59,831, 59,996, and 60,263

Support based on pivot points: 59,296, 59,131, and 58,863

Resistance based on Fibonacci retracement: 60,874, 62,294

Support based on Fibonacci retracement: 58,995, 58,646

Special Formation: The Bank Nifty sustained above all key moving averages despite consolidation in the recent past. On Friday, it formed a long green candle on the daily timeframe following a Doji formation, indicating a healthy trend. The RSI climbed to 67.21 and is on the verge of a positive crossover, while the Stochastic RSI turned bullish. The MACD remained below the reference line, but histogram weakness faded. All this indicates building strength and the potential for further upside.

3) Nifty Call Options Data

According to the weekly options data, the 26,500 strike holds the maximum Call open interest (with 1.12 crore contracts). This level can act as a key resistance level for the Nifty in the short term. It was followed by the 27,000 strike (1.11 crore contracts) and 26,400 strike (1.04 crore contracts).

Maximum Call writing was observed at the 26,400 strike, which saw an addition of 34.66 lakh contracts, followed by the 26,450 and 26,600 strikes, which added 18.45 lakh and 16.63 lakh contracts, respectively. The maximum Call unwinding was seen at the 26,000 strike, which shed 52.59 lakh contracts, followed by the 26,100 and 26,050 strikes, which shed 50.01 lakh and 32.78 lakh contracts, respectively.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 26,000 strike (with 1.68 crore contracts), which can act as a key support level for the Nifty in the short term. It was followed by the 25,900 strike (1.07 crore contracts) and the 26,100 strike (1.04 crore contracts).

The maximum Put writing was placed at the 26,000 strike, which saw an addition of 68.68 lakh contracts, followed by the 26,100 and 26,050 strikes, which added 61.01 lakh and 50.8 lakh contracts, respectively. The maximum Put unwinding was seen at the 25,600 strike, which shed 10.94 lakh contracts, followed by the 25,550 and 26,650 strikes, which shed 1.79 lakh and 1.6 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 12.73 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 (10.18 lakh contracts) and the 58,500 strike (8.24 lakh contracts).

Maximum Call writing was observed at the 62,000 strike (with the addition of 47,495 contracts), followed by the 59,700 strike (26,425 contracts) and 58,800 strike (25,060 contracts). The maximum Call unwinding was seen at the 59,500 strike, which shed 2.21 lakh contracts, followed by the 60,000 and 59,400 strikes, which shed 1.87 lakh and 86,590 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the 59,500 strike holds the maximum Put open interest (with 16.64 lakh contracts), which can act as a key support level for the index. This was followed by the 59,000 strike (13.45 lakh contracts) and the 58,500 strike (10.25 lakh contracts).

The maximum Put writing was placed at the 59,000 strike (which added 1.79 lakh contracts), followed by the 60,000 strike (1.73 lakh contracts) and the 59,500 strike (1.21 lakh contracts). The maximum Put unwinding was seen at the 59,200 strike, which shed 34,685 contracts, followed by the 60,300 and 58,400 strikes, which shed 31,710 and 16,765 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, jumped to 1.22 on December 5, compared to 0.93 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 subdued for the fourth consecutive session and fell 4.65 percent on Friday to 10.32, its lowest closing level since October 10. In fact, it has been falling for the second consecutive week, signalling comfort for bulls and low uncertainty ahead. However, it also serves as a cautionary signal, as a sharp market move on either side cannot be ruled out.

10) Long Build-up (69 Stocks)

A long build-up was seen in 69 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (28 Stocks)

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

12) Short Build-up (48 Stocks)

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

13) Short-Covering (67 Stocks)

67 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: Kaynes Technology India

Stocks retained in F&O ban: Bandhan Bank, Sammaan Capital

Stocks removed from F&O ban: Nil