Trade setup for May 23: Top 15 things to know before the opening bell

Nifty Trade Setup

The Nifty 50 erased all of its previous day’s gains and shed 0.8 percent on May 22, with above-average volumes. The index continued its lower-high formation for the fifth consecutive session. However, it managed to defend the crucial 24,450–24,500 zone on a closing basis, thanks to buying interest at lower levels. This zone remains pivotal, as a breakdown could push the index further down toward 24,350, while holding above this level may open the path for a rebound towards the 24,800–24,900 range, according to experts.

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

1) Key Levels For The Nifty 50 (24,610)

Resistance based on pivot points: 24,708, 24,773, and 24,878

Support based on pivot points: 24,498, 24,433, and 24,328

Special Formation: The Nifty 50 formed a bearish candle with a lower shadow on the daily chart, indicating buying interest at lower levels. Importantly, the index remained above key moving averages — the 20-day, 50-day, and 200-day EMAs. The upper line of the Bollinger Bands continues to expand, suggesting potential volatility. The MACD (Moving Average Convergence Divergence) showed a negative crossover with a weakening histogram but still remained well above the zero line, indicating underlying positive momentum. The RSI (Relative Strength Index) maintained a negative crossover, yet stayed above the neutral 50 mark at 55.62, suggesting the trend hasn't fully weakened.

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

Resistance based on pivot points: 54,998, 55,097, and 55,258

Support based on pivot points: 54,678, 54,579, and 54,419

Resistance based on Fibonacci retracement: 56,307, 58,648

Support based on Fibonacci retracement: 54,117, 52,892

Special Formation: The Bank Nifty formed a small bullish candle with a long lower shadow on the daily timeframe, supported by better volumes than those seen in the previous five sessions. This reflects buying interest at lower levels. The index successfully defended both the midline of the Bollinger Bands and the 20-day EMA on a closing basis — both considered positive signals. Despite this, the index continued its lower highs and lower lows formation for the third straight session, indicating a still-fragile trend. The MACD remained below the signal line, with moderate weakness in the histogram, but still held above the zero line, implying that downside momentum is not yet dominant. The RSI also maintained a negative crossover, yet stayed above the neutral 50 mark at 56.4, mirroring Nifty’s trend strength amid consolidation.

3) Nifty Call Options Data

According to the monthly options data, the 25,000 strike holds the maximum Call open interest (with 86.95 lakh contracts). This level can act as a key resistance for the Nifty in the short term. It was followed by the 25,500 strike (65.62 lakh contracts), and the 24,800 strike (47.46 lakh contracts).

Maximum Call writing was observed at the 24,600 strike, which saw an addition of 34.59 lakh contracts, followed by the 25,400 and 25,500 strikes, which added 25.23 lakh and 24.28 lakh contracts, respectively. The maximum Call unwinding was seen at the 23,950 strike, which shed 1,875 contracts, followed by the 24,250 and 23,700 strikes, which shed 1,650 and 975 contracts, respectively.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 24,000 strike (with 81.75 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 24,500 strike (67.76 lakh contracts) and the 24,600 strike (43.78 lakh contracts).

The maximum Put writing was placed at the 24,600 strike, which saw an addition of 20.38 lakh contracts, followed by the 23,900 and 24,000 strikes, which added 15.14 lakh and 14.91 lakh contracts, respectively. The Put unwinding was seen at the 24,800 strike, which shed 6.15 lakh contracts, followed by the 25,100 and 24,900 strikes which shed 2.52 lakh and 2.49 lakh contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the 56,000 strike holds the maximum Call open interest, with 15.38 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 55,500 strike (13.72 lakh contracts) and the 57,000 strike (11.78 lakh contracts).

Maximum Call writing was visible at the 55,000 strike (with the addition of 1.96 lakh contracts), followed by the 56,000 strike (1.29 lakh contracts), and the 54,800 strike (1.22 lakh contracts). The maximum Call unwinding was seen at the 55,200 strike, which shed 30,300 contracts, followed by the 54,000 and 55,400 strikes, which shed 23,460 and 18,750 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 14.53 lakh contracts), which can act as a key level for the index. This was followed by the 54,000 strike (12.16 lakh contracts) and the 55,500 strike (6.85 lakh contracts).

The maximum Put writing was observed at the 54,700 strike (which added 86,370 contracts), followed by the 54,800 strike (75,750 contracts) and the 54,600 strike (47,310 contracts). The maximum Put unwinding was seen at the 55,000 strike, which shed 2.37 lakh contracts, followed by the 55,100 and 55,500 strikes, which shed 71,130 and 45,720 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, increased to 0.94 on May 22, from 0.81 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, declined by 1.65 percent to 17.26 after a three-day uptrend. Despite the pullback, it remains in an elevated zone, signaling caution for bulls and the potential for sharp price swings.

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 (62 Stocks)

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

12) Short Build-up (91 Stocks)

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

13) Short-Covering (30 Stocks)

30 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: Dixon Technologies

Stocks retained in F&O ban: Manappuram Finance, RBL Bank, Titagarh Rail Systems

Stocks removed from F&O ban: Nil