Trade setup for February 6: Top 15 things to know before the opening bell on RBI policy day

Nifty Trade setup for February 6

• Market cautious ahead of RBI policy meeting scheduled on February 6
• As long as Nifty stays above 25,500–25,450, upward move toward 25,800–26,000 possible
• Decisive fall below 25,450 can open the door for 25,000

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The Nifty 50 fell for the first time in the last four consecutive sessions, shedding half a percent on February 5 amid caution ahead of the RBI policy meeting scheduled on February 6. However, it managed to defend the upper band of Tuesday’s long bullish gap on a closing basis, though the gap was partially filled on an intraday basis. The momentum indicators remained in a positive bias, and the falling VIX favoured the bulls. Hence, as long as the index stays above 25,500–25,450 (key support), an upward move toward 25,800–26,000 is possible; however, a decisive fall below this level can open the door for 25,000, where the maximum Put open interest is placed, experts said.

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

1) Key Levels For The Nifty 50 (25,643)

Resistance based on pivot points: 25,728, 25,770, and 25,838

Support based on pivot points: 25,592, 25,550, and 25,482

Special Formation: The Nifty formed a bearish candle with a lower shadow within the previous day’s range on the daily charts, signalling consolidation. The index closed marginally below the 50-day EMA but stayed well above all other key moving averages, with short-term moving averages (10- and 20-day EMA) trending upward. The momentum indicators continued to show a positive bias, with the MACD sustaining a bullish crossover and the histogram rising further. The RSI slipped slightly to 51.68 but remained above the reference line. All this indicates consolidation with a positive bias.

2) Key Levels For The Bank Nifty (60,064)

Resistance based on pivot points: 60,262, 60,367, and 60,538

Support based on pivot points: 59,920, 59,815, and 59,644

Resistance based on Fibonacci retracement: 60,437, 61,159

Support based on Fibonacci retracement: 59,461, 58,917

Special Formation: The Bank Nifty also reported a bearish candle, following the small-bodied bullish candle of the previous session, but consistently maintained above the falling support trendline for the third straight session on a closing basis, indicating consolidation after Tuesday’s sharp run. The banking index held above all key moving averages, with short-term moving averages trending upward and positive momentum indicators. All this indicates consolidation with strength intact.

3) Nifty Call Options Data

According to the weekly options data, the 26,000 strike holds the maximum Call open interest (with 1.45 crore contracts). This level can act as a key resistance level for the Nifty in the short term. It was followed by the 25,800 strike (1.13 crore contracts) and 26,500 strike (91.71 lakh contracts).

Maximum Call writing was observed at the 25,700 strike, which saw an addition of 56.98 lakh contracts, followed by the 26,000 and 25,800 strikes, which added 48.19 lakh and 37.06 lakh contracts, respectively. The maximum Call unwinding was seen at the 25,100 strike which shed 4.06 lakh contracts, followed by the 25,000 and 25,200 strikes, which shed 57,395 and 54,535 contracts, respectively.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 25,000 strike (with 95.73 lakh contracts), which can act as a key support level for the Nifty in the short term. It was followed by the 25,500 strike (63.1 lakh contracts) and the 25,600 strike (46.57 lakh contracts).

The maximum Put writing was placed at the 25,000 strike, which saw an addition of 16.95 lakh contracts, followed by the 25,400 and 25,100 strikes, which added 10.91 lakh and 10.58 lakh contracts, respectively. The maximum Put unwinding was seen at the 25,800 strike, which shed 22.05 lakh contracts, followed by the 25,700 and 25,750 strikes, which shed 13.9 lakh and 13.7 lakh contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the 60,000 strike holds the maximum Call open interest, with 16.08 lakh contracts. This can act as a key level for the index in the short term. It was followed by the 61,000 strike (6.11 lakh contracts) and the 60,500 strike (5.82 lakh contracts).

Maximum Call writing was observed at the 61,700 strike (with the addition of 54,690 contracts), followed by the 60,000 strike (52,980 contracts) and 60,100 strike (43,560 contracts). The maximum Call unwinding was seen at the 58,900 strike, which shed 11,130 contracts, followed by the 61,300 and 61,500 strikes which shed 9,510 and 8,790 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 60,000 strike (with 19.1 lakh contracts), which can act as a key support level for the index. This was followed by the 59,000 strike (7.77 lakh contracts) and the 58,500 strike (5.88 lakh contracts).

The maximum Put writing was placed at the 60,900 strike (which added 19,500 contracts), followed by the 58,700 strike (6,480 contracts) and the 58,400 strike (6,030 contracts). The maximum Put unwinding was seen at the 60,000 strike which shed 72,270 contracts, followed by the 60,500 and 60,400 strikes, which shed 60,540 and 33,900 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 0.81 on February 5, compared to 1.07 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 fear gauge, India VIX, fell for the fourth consecutive session, down 0.69 percent to 12.17 on Thursday and 19.39 percent for the week, which signalled comfort for bulls. A fall below all moving averages in the following sessions can bring stronger comfort for bulls and lower uncertainty.

10) Long Build-up (34 Stocks)

A long build-up was seen in 34 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (65 Stocks)

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

12) Short Build-up (74 Stocks)

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

13) Short-Covering (38 Stocks)

38 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