The market seems to be struggling hard to hold on to the 21,500 mark, the immediate support level as bears made several attempts in the recent past to break the said support but bulls strongly resisted and helped the Nifty 50 to close above the same mark. Hence, as long as the index holds the said support, rangebound trade is expected to continue with resistance at 21,750-21,850 levels, experts said. If the index breaks 21,500, then possibly there may be strong action from bears, they added.
On January 9, the benchmark indices had a strong opening after a day of correction but erased most of gains in last hour of trade and finally settled with moderate gains due to profit taking at higher levels. Overall, the indices traded within the previous day's range. The BSE Sensex was up 31 points at 71,386, while the Nifty 50 gained 32 points at 21,545 and formed bearish candlestick pattern on the daily charts as the closing was lower than opening levels.
"Technically, this is negative indication and signal occurrence of sharp weakness from the overhead hurdles around 21,750 levels," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
The Nifty 50 has now started to visit the immediate supports of 10-day EMA (exponential moving average 21,565) frequently, after showing minor upside bounces. The said moving average was intact since past two months and a decisive break below this support at 21,500 could trigger more weakness ahead, he said.
Further, he feels the short-term trend of Nifty remains weak and emergence of selling pressure at the lower highs around 21,750-21,850 levels indicate weak bias for the short term. "Any upside bounce from here could encounter hurdle around 21,700 levels."
According to Kunal Shah, senior technical & derivative analyst at LKP Securities, any significant directional movement for Nifty hinges on two possibilities: achieving a closing above 21,750 to reclaim bullish momentum, or experiencing a close below 21,500, which could prompt additional selling pressure and potentially pull the Nifty index toward the 21,200 mark.
The market breadth was slightly tilted in favour of bulls as about 1,198 equity shares advanced against 965 declining shares on the NSE.
We have collated 15 data points to help you spot profitable trades:
Key support and resistance levels on the Nifty
The pivot point calculator indicates that the Nifty is likely to see immediate resistance at 21,564 followed by 21,723 and 21,802 levels, while on the lower side, it can take support at 21,517 followed by 21,468 and 21,389 levels.
On January 9, the Bank Nifty extended selling pressure for third consecutive session with formation of lower highs, lower lows for yet another trading day. Further, the index closed below 10-day as well as 20-day EMA (exponential moving average) and formed bearish candlestick pattern on the daily charts, indicating bears seem to be getting strong.
The banking index was down 208 points at 47,243.
"Bank Nifty breached the previous day's low (47,387) which is a sign of weakness. It is approaching crucial support placed in the range (47,000 – 46,900) and until this range is decisively breached on the downside the structure is still in favour of the bulls," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.
As per the pivot point calculator, the Bank Nifty is expected to see resistance at the 47,315 level followed by 47,930 and 48,229 levels, while on the lower side, it may take support at 47,147 followed by 46,962 and 46,663 levels.
As per the weekly options data, the 21,700 strike owned the maximum Call open interest, with 1.03 crore contracts, which can act as a key resistance level for the Nifty in the short term. It was followed by the 21,600 strike, which had 75.33 lakh contracts, while the 21,800 strike had 75.15 lakh contracts.
Meaningful Call writing was seen at the 22,100 strike, which added 12.51 lakh contracts followed by 21,700 and 22,000 strikes adding 9.15 lakh and 6.26 lakh contracts, respectively.
The maximum Call unwinding was at the 22,200 strike, which shed 20.18 lakh contracts followed by 21,500 and 22,400 strikes that shed 5.58 lakh and 4.62 lakh contracts.
On the Put front, the maximum open interest was seen at 21,000 strike , which can act as a key support area for the Nifty with 59.87 lakh contracts. It was followed by 21,500 strike comprising 55.91 lakh contracts and then 21,400 strike with 49.26 lakh contracts.
Meaningful Put writing was at 21,200 strike, which added 14.31 lakh contracts followed by 21,400 strike and 21,700 strike adding 13.34 lakh contracts and 12.57 lakh contracts, respectively.
The Put unwinding was seen at 20,900 strike, which shed 7.83 lakh contracts followed by 21,000 strike and 20,600 strike, which shed 2.42 lakh contracts and 1.82 lakh contracts, respectively.
Stocks with high delivery percentage
A high delivery percentage suggests that investors are showing interest in the stock. ICICI Prudential Life Insurance Company, Pidilite Industries, Hindustan Unilever, Grasim Industries, and Godrej Consumer Products saw the highest delivery among the F&O stocks.
A long build-up was seen in 48 stocks, which included Bajaj Auto, JK Cement, DLF, Petronet LNG, and Godrej Properties. An increase in open interest (OI) and price indicates a build-up of long positions.
Based on the OI percentage, 30 stocks saw long unwinding, including Godrej Consumer Products, Zee Entertainment Enterprises, ACC, Bajaj Finance, and Vodafone Idea. A decline in OI and price indicates long unwinding.
49 stocks see a short build-up
A short build-up was seen in 49 stocks including Polycab India, Dr Lal PathLabs, Navin Fluorine International, SRF, and Page Industries. An increase in OI along with a fall in price points to a build-up of short positions.
Based on the OI percentage, 58 stocks were on the short-covering list. This included Birlasoft, Bandhan Bank, Hindustan Copper, Chambal Fertilisers & Chemicals, and Adani Ports. A decrease in OI along with a price increase is an indication of short-covering.
The Nifty Put Call ratio (PCR), which indicates the mood of the equity market, rose to 0.88 on January 9, from 0.84 levels in the previous session. The below 1 PCR indicates that the traders are buying more Calls options than Puts, which generally indicates an increase in bullish sentiment.
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Stocks in the news
SpiceJet: Sources told CNBC-TV18 that Carlyle Aviation president recently held a meeting with SpiceJet CMD Ajay Singh ahead of its AGM Meeting. Carlyle Aviation discussed prospects & strategies for SpiceJet & SpiceXpress. Carlyle Aviation holds a seven percent stake in Spicejet currently.
Steel Strips Wheels: Steel Strips Wheels announced it acquired AMW Autocomponent for Rs 138.5 crore. The company has infused equity of Rs 5 crore and inter corporate loan of Rs 133.15 crore into AMW Autocomponent.
Delta Corp: The company in its Q3 results saw its net profit fall 59.34 percent from previous year to Rs 34.48 crore. Its revenue fell 15.58 percent to Rs 231.74 crore. Casino and online gaming, company’s strong business divisions show sharp revenue slowdown.
Power Finance Corporation: PFC received no objection letter from the RBI to set up a wholly-owned subsidiary finance company in International Financial Services Centre (IFSC) situated in GIFT City in Gujarat.
Lupin: Lupin announced the launch of Bromfenac Opthalmic Solution, 0.07% in the US after receiving approval from US FDA. The solution is used for postoperative inflammation and reduction of ocular pain in patients who have undergone cataract surgery.
Shyam Metalics and Energy: The company raised Rs 1,385 crore through the Qualified Institutional Placement (QIP) against the total bid amount received Rs 4,055 crore, representing 3.5 times the fund received. The QIP Committee approved the issue allotment of 2,40,51,165 equity shares of face value of Rs 10 each to 38 Qualified Institutional Buyers (QIBs) at an issue price of Rs 576 per equity share.
Funds Flow (Rs crore)
Foreign institutional investors (FIIs) sold shares worth Rs 990.90 crore, while domestic institutional investors (DIIs) purchased Rs 104.23 crore worth of stocks on January 9, provisional data from the NSE showed.
Stock under F&O ban on NSE
The NSE has retained Balrampur Chini Mills, Bandhan Bank, Chambal Fertilisers & Chemicals, Delta Corp, Escorts Kubota, GNFC (Gujarat Narmada Valley Fertilisers & Chemicals), Hindustan Copper, Indian Energy Exchange, India Cements, National Aluminium Company, Piramal Enterprises, and SAIL to its F&O ban list for January 10, while Zee Entertainment Enterprises removed from the said list.
Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.
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