Trade setup for May 14: Top 15 things to know before the opening bell

Nifty Trade Setup

The Nifty 50 witnessed profit booking after an outstanding rally, falling 1.4 percent on May 13. However, the market breadth and technical indicators remained supportive, given the easing of most risk factors. Experts believe that such small profit-taking in a bull run makes the market healthier. As a result, in the upcoming sessions, the index is likely to gradually move northward toward the 24,700–24,800 levels amid consolidation. Sustaining above this range could open doors for the 25,000 mark, which remains the key hurdle. However, if the index corrects, 24,380 (the low of Monday's long bullish candle) is expected to act as the key support.

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

1) Key Levels For The Nifty 50 (24,578)

Resistance based on pivot points: 24,863, 24,963, and 25,126

Support based on pivot points: 24,537, 24,436, and 24,274

Special Formation: The Nifty 50 formed a bearish candlestick pattern on the daily charts with above-average volumes, signaling weakness. However, the index continues to trade above all key moving averages (5, 10, 20, 50, and 200-day EMAs), and both the short- and medium-term moving averages are trending upward, which remains a positive indication. Additionally, the RSI (Relative Strength Index) is still holding above the 60 mark, and the MACD is well above the zero line with a positive crossover.

2) Key Levels For The Bank Nifty (54,941)

Resistance based on pivot points: 55,343, 55,487, and 55,721

Support based on pivot points: 54,876, 54,732, and 54,499

Resistance based on Fibonacci retracement: 56,297, 58,630

Support based on Fibonacci retracement: 54,147, 52,923

Special Formation: The Bank Nifty traded within the previous day's range and closed 442 points lower, forming a bearish candlestick pattern on the daily timeframe. Despite this, the banking index remains above all key moving averages and above the midline of the Bollinger Bands, though it is still in consolidation mode. The MACD showed a negative crossover but remained above the zero line, while the RSI hovered near the 60 mark, though it trended downward.

3) Nifty Call Options Data

According to the weekly options data, the maximum Call open interest was seen at the 25,000 strike (with 1.26 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 (1.16 crore contracts), and the 24,800 strike (71.45 lakh contracts).

Maximum Call writing was observed at the 25,000 strike, which saw an addition of 60.97 lakh contracts, followed by the 24,700 and 25,500 strikes, which added 40.24 lakh and 40.05 lakh contracts, respectively. The maximum Call unwinding was seen at the 24,000 strike, which shed 4.29 lakh contracts, followed by the 24,400 and 24,300 strikes, which shed 3.16 lakh and 2.14 lakh contracts, respectively.

4) Nifty Put Options Data

On the Put side, the 24,000 strike holds the maximum Put open interest (with 95.24 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 24,200 strike (59.04 lakh contracts) and the 24,500 strike (58.87 lakh contracts).

The maximum Put writing was placed at the 24,000 strike, which saw an addition of 10.55 lakh contracts, followed by the 24,200 and 23,800 strikes, which added 6.01 lakh and 4.8 lakh contracts, respectively. The Put unwinding was seen at the 24,800 strike, which shed 24.19 lakh contracts, followed by the 24,500 and 24,700 strikes which shed 21.83 lakh and 20.46 lakh contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the maximum Call open interest was seen at the 56,000 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 55,000 strike (12.72 lakh contracts) and the 55,500 strike (11.91 lakh contracts).

Maximum Call writing was visible at the 55,500 strike (with the addition of 2.43 lakh contracts), followed by the 55,000 strike (2.01 lakh contracts) and the 57,000 strike (1.8 lakh contracts). The maximum Call unwinding was seen at the 54,000 strike, which shed 3.06 lakh contracts, followed by the 55,900 and 53,000 strikes, which shed 21,600 and 9,450 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the 55,000 strike holds the maximum Put open interest (with 17.69 lakh contracts), which can act as a key level for the index. This was followed by the 53,000 strike (11.16 lakh contracts) and the 54,000 strike (10.85 lakh contracts).

The maximum Put writing was observed at the 56,500 strike (which added 16,800 contracts), followed by the 54,900 strike (13,860 contracts) and the 54,200 strike (9,330 contracts). The maximum Put unwinding was seen at the 54,000 strike, which shed 1.78 lakh contracts, followed by the 55,200 and 55,300 strikes, which shed 1.18 lakh and 97,020 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, fell sharply to 0.85 (the lowest level since April 8) on May 13, from 1.29 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, dropped further to 18.2, down 1.05 percent. For the bulls to gain stronger momentum, the VIX needs to continue its downtrend and sustain below the 15 mark.

10) Long Build-up (36 Stocks)

A long build-up was seen in 36 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (59 Stocks)

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

12) Short Build-up (86 Stocks)

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

13) Short-Covering (39 Stocks)

39 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: Central Depository Services, Manappuram Finance

Stocks removed from F&O ban: Nil