Trade setup for October 21: Top 15 things to know before the opening bells on Muhurat Trading

Nifty Trade setup Muhurat Trading

The market staged a healthy performance for the fourth straight session following a gap-up opening, with bulls celebrating Diwali—the festival of lights—and driving the Nifty 50 above the 25,800 zone with half a percent gains on October 20, a day ahead of the Muhurat trading session scheduled for the afternoon of October 21. The index has rallied more than 1,300 points so far this month. Despite pressure at higher levels, the higher high–higher low structure remains intact. Hence, as long as the index sustains above 25,700, a rally towards the 25,950–26,000 zone can't be ruled out before potential consolidation sets in. The crucial support remains at 25,500, experts said.

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

1) Key Levels For The Nifty 50 (25,843)

Resistance based on pivot points: 25,905, 25,938, and 25,990

Support based on pivot points: 25,800, 25,768, and 25,715

Special Formation: The Nifty 50 formed a small bullish candle with a long upper shadow on the daily chart after a gap-up opening, indicating a positive trend, albeit with pressure at higher levels. The index maintained a higher high–higher low structure, with key moving averages trending upward. The Relative Strength Index (RSI) soared to 71.8, indicating strong momentum. The MACD continued trending northward, accompanied by a rising histogram. All these indicators point to continued bullish strength, though some caution at higher levels is warranted due to potential profit-taking.

2) Key Levels For The Bank Nifty (58,033)

Resistance based on pivot points: 58,204, 58,296, and 58,445

Support based on pivot points: 57,907, 57,816, and 57,667

Resistance based on Fibonacci retracement: 58,735, 60,142

Support based on Fibonacci retracement: 57,414, 56,456

Special Formation: The Bank Nifty remained in uncharted territory, rising 0.55 percent and forming a bullish candle with an upper shadow on the daily timeframe, supported by significant volumes. This indicates the continuation of a positive trend despite profit-booking at higher levels. The higher top–higher bottom formation remained intact. Moving averages continued to incline upward. The RSI climbed to 76.7, suggesting overbought but strong momentum. The MACD trended upward, with strength reflected in the rising histogram. All these signals reaffirm the bullish tone in the banking index, though traders may need to watch for pullbacks from elevated levels.

3) Nifty Call Options Data

According to the monthly options data, the 26,000 strike holds the maximum Call open interest (with 92.61 lakh contracts). This level can act as a key resistance for the Nifty in the short term. It was followed by the 26,500 strike (84.59 lakh contracts), and the 26,200 strike (60.07 lakh contracts).

Maximum Call writing was observed at the 26,500 strike, which saw an addition of 31.22 lakh contracts, followed by the 26,000 and 26,200 strikes, which added 30.54 lakh and 27.68 lakh contracts, respectively. The maximum Call unwinding was seen at the 25,700 strike, which shed 7.88 lakh contracts, followed by the 25,750 and 25,450 strikes, which shed 2.65 lakh and 1.59 lakh contracts, respectively.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 25,500 strike (with 74.65 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 25,700 strike (59.24 lakh contracts) and the 25,200 strike (56.52 lakh contracts).

The maximum Put writing was placed at the 25,700 strike, which saw an addition of 33.32 lakh contracts, followed by the 25,900 and 25,200 strikes, which added 26.21 lakh and 20.59 lakh contracts, respectively. There was hardly any Put unwinding seen in the 25,200-26,600 strike band.

5) Bank Nifty Call Options Data

According to the monthly options data, the maximum Call open interest was seen at the 57,000 strike, with 17.65 lakh contracts. This can act as a key level for the index in the short term. It was followed by the 58,000 strike (15.02 lakh contracts) and the 60,000 strike (12.58 lakh contracts).

Maximum Call writing was observed at the 58,200 strike (with the addition of 2.95 lakh contracts), followed by the 60,000 (2.85 lakh contracts) and 58,100 strike (1.7 lakh contracts). The maximum Call unwinding was seen at the 57,000 strike, which shed 1.97 lakh contracts, followed by the 57,700 and 57,200 strikes, which shed 1.85 lakh and 99,190 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the 57,000 strike holds the maximum Put open interest (with 22.14 lakh contracts), which can act as a key support level for the index. This was followed by the 58,000 strike (9.19 lakh contracts) and the 57,500 strike (7.67 lakh contracts).

The maximum Put writing was placed at the 58,000 strike (which added 5.79 lakh contracts), followed by the 57,400 strike (2.6 lakh contracts) and the 58,200 strike (1.93 lakh contracts). The maximum Put unwinding was seen at the 56,400 strike which shed 2.62 lakh contracts, followed by the 56,300 and 57,000 strikes, which shed 1.86 lakh and 87,395 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 to 1.15 on October 20, compared to 1.21 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 2.32 percent to 11.36 after spiking in the previous couple of sessions. Although the index stayed above short- and medium-term moving averages, it continued to hover in the lower zones, signaling comfort for bulls amid reduced uncertainty.

10) Long Build-up (90 Stocks)

A long build-up was seen in 90 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (13 Stocks)

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

12) Short Build-up (58 Stocks)

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

13) Short-Covering (52 Stocks)

52 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: Sammaan Capital

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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