NIFTY 50 – Market Sentiment & Probable Movement (Daily Time Frame)
Views and Vision
Based on attached daily chart and the short-covering seen in daily cumulative option variation, here is a structured, desk-style assessment.
1️⃣ What the chart is saying (Daily TF)
Price structure
Nifty is trading around 26,180, above rising EMA 55/100, and well above EMA 200 → medium-term trend remains positive.
Recent candles show upper rejection near 26,250–26,300, indicating supply from call writers at higher strikes.
VWAP/Value area is shifting upward → buyers are not exiting aggressively.
Momentum
RSI ~55–56: Neutral-to-positive, no divergence → room for mild upside, but not impulsive.
MACD: Histogram positive but flattening → momentum improving, not accelerating.
👉 Conclusion from chart:
This is not a breakdown structure. It is a consolidation within an uptrend.
2️⃣ Interpreting “short covering in daily cumulative option variation”
This is the key part of question.
What short covering in options actually means:
Reduction in net short option positions (mostly calls).
Writers are reducing risk, often due to:
Fear of upside extension
Volatility compression ending
Expiry proximity
What it does NOT automatically mean:
❌ It does not guarantee a trending rally.
❌ It does not ensure follow-through above resistance.
What it does imply:
Downside pressure is reducing
Range top is vulnerable to being tested
Market shifts from “sold into” → “balanced”
👉 Short covering opens the gate, but buyers still need to walk through.
3️⃣ Will this push Nifty to 26,250+ tomorrow?
Base case (Higher probability – ~60%)
Nifty tests 26,220–26,250
Supply emerges again from:
Fresh call writing
Delta-hedged selling
Market stays range-bound between 26,050–26,250
Bullish extension case (~25%)
If:
Opening sustains above 26,200
Call OI continues to unwind at 26,200–26,250
Then:
Fast move to 26,300–26,350 possible (short-covering fuel)
Rejection case (~15%)
If:
26,200 fails on opening
Call OI rebuilds quickly
Then:
Drift back to 26,050–26,000
👉 So yes — option short covering supports a test of 26,250,
👉 but not yet a confident breakout or trending move.
4️⃣ Why markets often stall after short covering
This explains many of the anomalies you’ve been observing recently:
Short covering = removal of sellers, not addition of buyers
After covering:
Market needs fresh longs
If they don’t come → price stagnates
That’s why:
“Data shows short covering, but price doesn’t move much”
This is absorption, not accumulation.
5️⃣ Key levels to watch tomorrow (Actionable)
Level
Meaning
26,000–26,050
Strong intraday demand / put support
26,180–26,200
Pivot zone (VWAP + OI equilibrium)
26,250
Max pain / call supply zone
26,300+
Only if call writers panic
6️⃣ Final desk view (one-line)
Daily option short covering reduces downside risk and allows Nifty to gravitate towards 26,250, but unless call OI unwinds decisively, the move is likely to remain range-bound rather than trending.
Anish Jagdish Parashar
Indirect tax india online research
Disclaimer:Content reflects personal views of the author ;for trading and investment purposes consult with your financial advisor.
