Trade setup for January 8: Top 15 things to know before the opening bell

Nifty Trade setup for January 8

• The Nifty 50 needs to surpass and hold above 26,200 for a move towards new highs. Until then, consolidation may persist with crucial support at 26,000, which coincides with the 20-day SMA and upward-sloping support trendlines.

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The Nifty 50 maintained consolidation with a negative bias for the third straight day, falling 0.14 percent and witnessing an indecisive pattern for two consecutive sessions on January 7. Cautionary signals continued from momentum indicators. Hence, consolidation with range-bound trade is expected to continue for a few more sessions before the index stabilises and rebounds. The index needs to surpass and hold above 26,200 for a move towards new highs. Until then, consolidation may persist with crucial support at 26,000, which coincides with the 20-day SMA and upward-sloping support trendlines, experts said.

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

1) Key Levels For The Nifty 50 (26,141)

Resistance based on pivot points: 26,178, 26,206, and 26,251

Support based on pivot points: 26,086, 26,058, and 26,013

Special Formation: The Nifty 50 formed a Doji candlestick pattern for the second consecutive session, indicating indecision between bulls and bears, especially after forming a bearish candle on the day it hit a record high. The index tested short-term moving averages intraday but managed to remain above them on a closing basis. The index continued to hold well above the midline of the Bollinger Bands, while the RSI declined to 53.96 and showed a negative crossover. The Stochastic RSI sustained a bearish crossover, while the MACD stayed above the reference line, though momentum in the histogram faded further. All these indicators point to near-term consolidation with a cautious undertone.

2) Key Levels For The Bank Nifty (59,991)

Resistance based on pivot points: 60,055, 60,127, and 60,244

Support based on pivot points: 59,823, 59,751, and 59,634

Resistance based on Fibonacci retracement: 60,502, 60,989

Support based on Fibonacci retracement: 59,776, 59,571

Special Formation: The Bank Nifty formed a small bearish candle with a long lower shadow on the daily charts, indicating minor weakness along with strong buying interest at lower levels. The index traded near the upper Bollinger Bands and remained above all key moving averages as well as the support trendline. The index corrected 0.2 percent on above-average volumes. The RSI edged lower to 62.85 but continued to hold above the reference line. The MACD also stayed above the signal line, though histogram momentum faded slightly. The Stochastic RSI remained below the reference line. All these signals indicate mild consolidation with a positive underlying structure.

3) Nifty Call Options Data

According to the weekly options data, the 26,500 strike holds the maximum Call open interest (with 1.09 crore contracts). This level can act as a key resistance level for the Nifty in the short term. It was followed by the 26,200 strike (1.07 crore contracts) and 26,300 strike (89.09 lakh contracts).

Maximum Call writing was observed at the 26,200 strike, which saw an addition of 45.89 lakh contracts, followed by the 26,150 and 26,500 strikes, which added 37.04 lakh and 35.61 lakh contracts, respectively. The maximum Call unwinding was seen at the 26,900 strike, which shed 8.28 lakh contracts.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 25,500 strike (with 74.01 lakh contracts), which can act as a key support level for the Nifty in the short term. It was followed by the 26,100 strike (70.43 lakh contracts) and the 26,000 strike (68.28 lakh contracts).

The maximum Put writing was placed at the 26,100 strike, which saw an addition of 36.66 lakh contracts, followed by the 26,150 and 25,750 strikes, which added 22.7 lakh and 21.12 lakh contracts, respectively. The maximum Put unwinding was seen at the 26,250 strike, which shed 2.04 lakh contracts, followed by the 26,300 and 26,500 strikes, which shed 1.03 lakh and 48,360 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 14.19 lakh contracts. This can act as a key level for the index in the short term. It was followed by the 60,000 strike (13.07 lakh contracts) and the 62,000 strike (7.94 lakh contracts).

Maximum Call writing was observed at the 60,500 strike (with the addition of 1.13 lakh contracts), followed by the 60,000 strike (97,890 contracts) and 61,000 strike (60,540 contracts). The maximum Call unwinding was seen at the 61,900 strike, which shed 19,530 contracts, followed by the 59,000 and 60,300 strikes which shed 14,250 and 12,030 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 59,500 strike (with 19.59 lakh contracts), which can act as a key support level for the index. This was followed by the 60,000 strike (11.74 lakh contracts) and the 59,000 strike (10.6 lakh contracts).

The maximum Put writing was placed at the 59,900 strike (which added 29,700 contracts), followed by the 59,800 strike (29,190 contracts) and the 58,400 strike (19,950 contracts). The maximum Put unwinding was seen at the 60,400 strike, which shed 84,570 contracts, followed by the 60,300 and 60,100 strikes, which shed 70,050 and 36,750 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, declined to 0.89 on January 7, compared to 0.92 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

India VIX, also known as the fear gauge, continued to hover around its short-term moving averages for the third consecutive session and fell 0.67 percent to 9.95 on Wednesday, signalling no major risk for bulls.

10) Long Build-up (57 Stocks)

A long build-up was seen in 57 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (40 Stocks)

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

12) Short Build-up (59 Stocks)

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

13) Short-Covering (56 Stocks)

56 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: SAIL, Sammaan Capital

Stocks removed from F&O ban: Nil