The market skyrocketed nearly 4 percent after a gap-up opening on May 12, making a strong start to the week, following easing geopolitical tensions between India and Pakistan, progress in the US-China trade deal, and a steep fall in the VIX. Technical indicators turned healthy, with the index moving back above all key moving averages and momentum indicators showing a positive bias. Hence, according to experts, the Nifty 50 is expected to move toward 25,200 in the upcoming sessions. However, some consolidation and profit booking may occur beforehand, considering the strong rally on Monday, with key support seen at 24,590.
Here are 15 data points we have collated to help you spot profitable trades:
1) Key Levels For The Nifty 50 (24,925)
Resistance based on pivot points: 24,966, 25,099, and 25,315
Support based on pivot points: 24,533, 24,400, and 24,183
Special Formation: The Nifty 50 formed a long bullish candlestick pattern on the daily charts after a gap-up opening, signaling a positive trend ahead. The index surpassed its short-term moving averages (5- and 10-day EMAs), which, along with the medium-term moving averages, are trending upward. The Relative Strength Index (RSI) climbed back above the 60 mark, currently at 67.7, and the MACD (Moving Average Convergence Divergence) showed a positive crossover with an improved histogram—both signaling an upward trend.
2) Key Levels For The Bank Nifty (55,383)
Resistance based on pivot points: 55,483, 55,697, and 56,044
Support based on pivot points: 54,789, 54,575, and 54,228
Resistance based on Fibonacci retracement: 56,277, 58,613
Support based on Fibonacci retracement: 54,145, 52,909
Special Formation: The Bank Nifty also formed a long bullish candlestick on the daily timeframe after a gap-up opening and climbed above short-term moving averages (5-, 10-, and 20-day EMAs). In fact, both short- and medium-term moving averages are trending northward, signaling strength in the index. The RSI climbed above the 60 mark to 62.58, suggesting a positive trend.
According to the weekly options data, the 26,000 strike holds the maximum Call open interest (with 1.19 crore contracts). This level can act as a key resistance for the Nifty in the short term. It was followed by the 25,500 strike (76.07 lakh contracts), and the 25,000 strike (65.03 lakh contracts).
Maximum Call writing was observed at the 26,000 strike, which saw an addition of 35.99 lakh contracts, followed by the 25,500 and 25,700 strikes, which added 25.84 lakh and 25.54 lakh contracts, respectively. The maximum Call unwinding was seen at the 24,500 strike, which shed 23.12 lakh contracts, followed by the 24,400 and 24,300 strikes, which shed 18.32 lakh and 18.04 lakh contracts, respectively.
On the Put side, the maximum Put open interest was seen at the 24,000 strike (with 84.69 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 24,500 strike (80.7 lakh contracts) and the 24,600 strike (59.12 lakh contracts).
The maximum Put writing was placed at the 24,500 strike, which saw an addition of 71.19 lakh contracts, followed by the 24,600 and 24,700 strikes, which added 56.3 lakh and 46.4 lakh contracts, respectively. The Put unwinding was seen at the 24,050 strike, which shed 9,975 contracts.
5) Bank Nifty Call Options Data
According to the monthly options data, the 56,000 strike holds the maximum Call open interest, with 11.66 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 55,000 strike (10.7 lakh contracts) and the 57,000 strike (9.9 lakh contracts).
Maximum Call writing was visible at the 56,000 strike (with the addition of 1.2 lakh contracts), followed by the 55,000 strike (54,900 contracts) and the 55,300 strike (50,820 contracts). The maximum Call unwinding was seen at the 54,000 strike, which shed 4.24 lakh contracts, followed by the 53,500 and 55,500 strikes, which shed 2.39 lakh and 1.48 lakh contracts, respectively.
6) Bank Nifty Put Options Data
On the Put side, the maximum Put open interest was seen at the 55,000 strike (with 18.33 lakh contracts), which can act as a key support level for the index. This was followed by the 54,000 strike (12.64 lakh contracts) and the 55,500 strike (7.73 lakh contracts).
The maximum Put writing was observed at the 55,000 strike (which added 12.2 lakh contracts), followed by the 55,200 strike (1.75 lakh contracts) and the 55,300 strike (1.38 lakh contracts). The maximum Put unwinding was seen at the 54,000 strike, which shed 4.65 lakh contracts, followed by the 53,500 and 53,700 strikes, which shed 35,310 and 32,340 contracts, respectively.
The Nifty Put-Call ratio (PCR), which indicates the mood of the market, jumped to 1.29 (the highest since March 18) on May 12, from 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, also known as the fear index, fell sharply by 14.98 percent in a single session to 18.39 levels, providing comfort for the bulls. A further decline in the VIX would improve sentiment and offer more support to the bullish outlook.
10) Long Build-up (115 Stocks)
A long build-up was seen in 115 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.
1 stock saw a decline in open interest (OI) along with a fall in price, indicating long unwinding.
8 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions.
13) Short-Covering (96 Stocks)
96 stocks saw short-covering, meaning a decrease in OI, along with a price increase.
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.
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: Central Depository Services, Manappuram Finance
Stocks removed from F&O ban: RBL Bank
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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