Trade setup for October 08: Top 15 things to know before the opening bells

Nifty Trade setup for October 08

The Nifty 50 failed to hold its entire intraday gains as well as the 25,200 zone—the day's high—due to profit booking, and closed 0.12 percent higher on October 7, continuing its upward journey for a fourth straight session. Technical and momentum indicators remained favourable for bulls, with a continuation of the higher top–higher bottom formation. Hence, if the index decisively surpasses this hurdle, the 25,400–25,500 levels are the ones to watch, provided the 25,000–24,900 zone holds as support, according to experts.

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

1) Key Levels For The Nifty 50 (25,108)

Resistance based on pivot points: 25,190, 25,225, and 25,280

Support based on pivot points: 25,080, 25,046, and 24,991

Special Formation: The Nifty 50 formed a small bullish candle with a long upper shadow, resembling a Shooting Star-like pattern on the daily timeframe following the recent rally. This is typically a bearish reversal pattern, but confirmation in the following session is required. The index stayed well above the midline of the Bollinger Bands. The RSI climbed to 56.19 with a positive crossover. The MACD is on the verge of a bullish crossover, while weakness in the histogram faded further. All of this indicates underlying strength, but caution is warranted due to the potential reversal signal.

2) Key Levels For The Bank Nifty (56,239)

Resistance based on pivot points: 56,438, 56,551, and 56,733

Support based on pivot points: 56,073, 55,961, and 55,778

Resistance based on Fibonacci retracement: 56,758, 57,628

Support based on Fibonacci retracement: 55,808, 55,383

Special Formation: The Bank Nifty also witnessed profit booking at higher levels, forming a bullish candle with a long upper shadow and a minor lower shadow on the daily chart. The index sustained near the upper Bollinger Band, maintaining its higher high–higher low structure and extending its upward journey for the sixth consecutive session, rising 0.24 percent on Tuesday. The 20-day EMA is on the verge of a bullish crossover with the 50-day EMA, while both short- and medium-term moving averages continued to trend upward. The RSI jumped to 64.68, and the MACD maintained a positive crossover with further strength in the histogram. All of this indicates continued bullish momentum for the Bank Nifty.

3) Nifty Call Options Data

According to the weekly options data, the maximum Call open interest was seen at the 25,200 strike (with 54.52 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 (50.06 lakh contracts), and the 25,300 strike (47.5 lakh contracts).

Maximum Call writing was observed at the 25,200 strike, which saw an addition of 34.41 lakh contracts, followed by the 25,300 and 25,400 strikes, which added 31.56 lakh and 22.91 lakh contracts, respectively. The maximum Call unwinding was seen at the 24,900 strike, which shed 1.96 lakh contracts, followed by the 24,700 and 25,050 strikes, which shed 49,875 and 49,575 contracts, respectively.

4) Nifty Put Options Data

On the Put side, the 25,000 strike holds the maximum Put open interest (with 67.41 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 24,500 strike (38.78 lakh contracts) and the 25,100 strike (32.45 lakh contracts).

The maximum Put writing was placed at the 25,000 strike, which saw an addition of 40 lakh contracts, followed by the 25,200 and 25,100 strikes, which added 24.51 lakh and 21.34 lakh contracts, respectively. There was hardly any Put unwinding seen in the 24,500-25,900 strike band.

5) Bank Nifty Call Options Data

According to the monthly options data, the 57,000 strike holds the maximum Call open interest, with 20.56 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 58,000 strike (10.63 lakh contracts) and the 56,000 strike (9.89 lakh contracts).

Maximum Call writing was observed at the 56,400 strike (with the addition of 1.07 lakh contracts), followed by the 57,500 strike (82,845 contracts), and the 57,700 strike (47,810 contracts). The maximum Call unwinding was seen at the 56,100 strike, which shed 1 lakh contracts, followed by the 57,000 and 56,000 strikes, which shed 87,850 and 84,455 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 17.23 lakh contracts), which can act as a key support level for the index. This was followed by the 57,000 strike (11.23 lakh contracts) and the 56,000 strike (11.19 lakh contracts).

The maximum Put writing was observed at the 56,000 strike (which added 2.55 lakh contracts), followed by the 56,500 strike (2.52 lakh contracts) and the 55,000 strike (1.15 lakh contracts). The maximum Put winding was seen at the 55,600 strike which shed 56,420 contracts, followed by the 55,900 and 54,500 strikes, which shed 36,505 and 29,225 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, dropped to 1.03 on October 07, compared to 1.33 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 gauge, stayed below all key moving averages and fell 1.4 percent to 10.05, indicating a comfortable environment for bulls.

10) Long Build-up (52 Stocks)

A long build-up was seen in 52 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (31 Stocks)

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

12) Short Build-up (71 Stocks)

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

13) Short-Covering (59 Stocks)

59 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: RBL Bank

Stocks removed from F&O ban: Nil

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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