Market Overview:
The Nifty 50 exhibited a volatile session on February 19, with bulls initially pushing the index beyond the psychological 23,000 mark. However, bears regained control, erasing intraday gains and forcing the index to close marginally lower. Despite the bearish sentiment, the Nifty 50 maintained support at 22,800 and continued its higher highs-higher lows formation on daily charts, suggesting a potential for recovery. Experts anticipate another attempt to breach 23,000, with key resistance levels at 23,200-23,500 (20-day and 50-day EMAs). Below 23,000, consolidation is likely, with critical support at 22,800-22,700.
Key Insights:
1. Nifty 50 Technical Analysis:
Resistance Levels: 23,022, 23,078, 23,168 (pivot points); 23,500 (Call OI peak).
Support Levels: 22,843, 22,787, 22,697 (pivot points); 22,500 (Put OI peak).
Formation: A bullish candle with an upper shadow indicates selling pressure at higher levels. The index remains below key moving averages (10, 20, 50, 100, and 200-da EMAs), reflecting bearish momentum.
2. Bank Nifty Outperformance:
The Bank Nifty surged 1%, closing above 49,500, and formed a bullish engulfing-like candlestick pattern. It breached the 10 and 20-day EMAs and entered the upper Bollinger Band, signaling strength.
Resistance Levels: 49,649, 49,843, 50,158 (pivot points); 51,000 (Call OI peak).
Support Levels: 49,019, 48,825, 48,510 (pivot points); 49,000 (Put OI peak).
3. Options Data Insights:
Nifty Call Options: Maximum open interest at 23,500 (1.15 crore contracts), indicating strong resistance. Call writing at 23,100 (38.43 lakh contracts added) suggests bearish pressure.
Nifty Put Options: Maximum open interest at 22,500 (81.02 lakh contracts), acting as key support. Put writing at 22,800 (21.16 lakh contracts added) indicates bullish hedging.
Bank Nifty Call Options: 51,000 strike holds maximum open interest (19.48 lakh contracts), acting as resistance.
Bank Nifty Put Options: 49,000 strike holds maximum open interest (15.53 lakh contracts), acting as support.
4. Market Sentiment Indicators:
Put-Call Ratio (PCR): Declined to 0.80, reflecting a bearish bias as Call selling outpaces Put selling.
India VIX: Fell 1.56% to 15.42 but remains elevated, indicating cautious market sentiment.
5. F&O Activity:
Long Build-up: 96 stocks saw increased OI and price, signaling bullish bets.
Short Build-up: 49 stocks saw increased OI with falling prices, indicating bearish bets.
Short-Covering: 71 stocks saw decreased OI with rising prices, suggesting bearish positions being unwound.
High Delivery Trades: Reflects strong investor interest in specific stocks.
6. F&O Ban List:
Manappuram Finance remains under the F&O ban, indicating high derivative activity.
Trading Strategy Recommendations:
Nifty 50: Traders should watch the 23,000 level closely. A sustained break above could target 23,200-23,500, while failure may lead to consolidation between 22,700-23,000.
Bank Nifty: The index shows relative strength. A break above 49,843 could target 50,158-50,374, with support at 49,000-48,825.
Options Traders: Focus on key strikes (23,500 for Nifty Calls, 22,500 for Nifty Puts; 51,000 for Bank Nifty Calls, 49,000 for Bank Nifty Puts) for directional bets.
Volatility Play: Elevated India VIX suggests caution; consider hedging strategies.
Conclusion:
The market remains in a tug-of-war between bulls and bears, with key levels and sentiment indicators providing actionable insights. While the Nifty 50 faces resistance at higher levels, the Bank Nifty's outperformance offers trading opportunities. Traders should remain cautious, monitor key support and resistance levels, and leverage options data for strategic positioning.
Anish Jagdish Parashar
Securities Analyst Indirect Tax India research
Source data nse
Disclaimer content reflects author's views; for investment decisions and trading proposes consult your financial advisor.
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