Trade setup for January 10: Top 15 things to know before the opening bell

Nifty Trade Setup

The Nifty 50 remained under pressure for another session, falling by seven-tenths of a percent on January 9, but managed to take support at 23,500, which coincides with an upward-sloping support trendline. Overall, the trend remains in favour of the bears, with momentum indicators in negative territory and the index trading below all key moving averages. According to experts, if the index fails to defend the 23,500 level in the upcoming sessions, a fall toward 23,263 (the November low) can't be ruled out. However, if it sustains above 23,500, it could open the door for a rebound toward the 23,900-24,000 zone, experts said.

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

1) Key Levels For The Nifty 50 (23,527)

Resistance based on pivot points: 23,644, 23,688, and 23,759

Support based on pivot points: 23,502, 23,458, and 23,387

Special Formation: The Nifty 50 formed a bearish candlestick pattern on the daily charts, sustaining below the 200-day EMA of 23,700. As a result, the index remains below all key moving averages, with a negative bias in the momentum indicators. The RSI (Relative Strength Index) stands at 39.51 in the lower band, while the MACD (Moving Average Convergence Divergence) remains below the zero line, signaling a weak trend.

2) Key Levels For The Bank Nifty (49,504)

Resistance based on pivot points: 49,728, 49,862, and 50,079

Support based on pivot points: 49,294, 49,160, and 48,943

Resistance based on Fibonacci retracement: 50,329, 51,015

Support based on Fibonacci retracement: 49,278, 47,870

Special Formation: The Bank Nifty maintained lower highs for the fifth consecutive session, forming a bearish candlestick pattern with a sizeable lower wick on the daily charts. It is trading near the lower band of the Bollinger Bands, remaining well below all key moving averages. The momentum indicators (RSI and MACD) are also in a negative trend, signaling continued weakness.

3) Nifty Call Options Data

According to the weekly options data, the 24,500 strike holds the maximum Call open interest (with 67.54 lakh contracts). This level can act as a key resistance for the Nifty in the short term. It was followed by the 24,000 strike (43.28 lakh contracts) and the 23,800 strike (34.34 lakh contracts).

Maximum Call writing was observed at the 24,500 strike, which saw an addition of 43.16 lakh contracts, followed by the 23,800 and 24,000 strikes, which added 24.7 lakh and 24.64 lakh contracts, respectively. There was hardly any Call unwinding seen in the 22,600-24,600 strike band.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 23,000 strike (with 31.51 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 23,500 strike (25.89 lakh contracts) and the 23,600 strike (24.71 lakh contracts).

The maximum Put writing was placed at the 23,000 strike, which saw an addition of 16.62 lakh contracts, followed by the 23,600 and 22,700 strikes, which added 16.08 lakh and 14.79 lakh contracts, respectively. There was hardly any Put unwinding seen in the 22,600-24,600 strike band.

5) Bank Nifty Call Options Data

According to the monthly options data, the 51,000 strike holds the maximum Call open interest, with 16.8 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 51,500 strike (13.45 lakh contracts) and the 50,000 strike (10.86 lakh contracts).

Maximum Call writing was visible at the 50,000 strike (with the addition of 1.69 lakh contracts), followed by the 49,500 strike (1.5 lakh contracts) and the 50,500 strike (90,165 contracts). The maximum Call unwinding was seen at the 50,200 strike, which shed 11,820 contracts, followed by the 51,100 and 51,800 strikes, which shed 9,300 and 8,220 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 49,000 strike (with 12.09 lakh contracts), which can act as a key support level for the index. This was followed by the 50,000 strike (11.38 lakh contracts) and the 48,000 strike (11.17 lakh contracts).

The maximum Put writing was observed at the 49,300 strike (which added 87,315 contracts), followed by the 49,400 strike (82,155 contracts) and the 49,500 strike (75,705 contracts). The maximum Put unwinding was seen at the 50,000 strike, which shed 73,380 contracts, followed by the 50,200 and 51,000 strikes which shed 48,960 and 38,280 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, climbed to 0.92 on January 9, from 0.83 level 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, the fear gauge that measures market volatility, increased by 1.33% to 14.66, signaling caution for bulls. It needs to drop below the 14 level for bulls to enter action mode.

10) Long Build-up (27 Stocks)

A long build-up was seen in 27 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 (104 Stocks)

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

13) Short-Covering (31 Stocks)

31 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, Hindustan Copper, L&T Finance, Manappuram Finance, RBL Bank

Stocks removed from F&O ban: Nil