Nifty Option

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• August 11, 2024

Nifty50  Pre- Open Market Analysis August 12

Post-Market Analysis for August 9, 2024

The Indian stock market closed on a positive note on August 9, with the Nifty 50 finishing 1 percent higher after a gap-up opening. However, the index struggled to sustain above key short-term moving averages (10 and 21-day EMA), which coincided with the crucial 24,400 mark. This level remains pivotal for further upside, with a target towards 24,700—the upper end of the bearish gap formed on August 5. The Nifty closed the week 1.4 percent down at 24,368, reflecting continued consolidation in the market.

A bearish candlestick pattern formed on the daily charts, characterized by minor upper and lower shadows, signaling potential indecision in the market. On the weekly timeframe, however, a Hammer-like candlestick pattern emerged at the bottom, often indicative of a trend reversal. Notably, the Nifty has held above the 10-day EMA for the 13th consecutive week, providing some bullish undertones. Despite this, the momentum indicator RSI showed a negative crossover on the weekly scale, hinting at potential caution among traders.

Pre-Open OI Data Analysis for August 12, 2024

The options data for the upcoming week presents a mixed bag, reflecting market sentiment and key levels to watch.

Resistance Levels: 24,408: First resistance based on pivot points, 24,433: Second resistance based on pivot points, 24,475: Third resistance based on pivot points.

Support Levels: 24,325: First support based on pivot points, 24,299: Second support based on pivot points, 24,258: Third support based on pivot points.

Special Formations:

• The maximum open interest on the Call side was seen at the 25,000 strike, with 87.13 lakh contracts, establishing this level as a significant resistance in the near term.
• Maximum Call writing occurred at the 25,000 strike, followed by the 24,400 and 24,900 strikes. This heavy Call writing suggests that the 25,000 mark will likely act as a strong resistance unless there is a significant bullish push.
• On the Put side, the 24,000 strike holds the maximum open interest, followed by the 23,500 and 24,300 strikes, making 24,000 a key support level.
• The 24,400 strike also saw notable Put writing, indicating some market participants believe this level could hold as support.

Market Sentiments Based on OI Data Analysis

The Nifty Put-Call Ratio (PCR) increased to 1.09 on August 9, up from 1.04 in the previous session. A rising PCR above 1 suggests that more traders are selling Put options compared to Call options, often signaling a bullish sentiment. The sharp drop in the India VIX, which fell 7.63 percent to 15.34, further supports a more bullish outlook, as lower volatility typically benefits the bulls. However, the trend remains cautious, with significant resistance at the 24,400 and 25,000 levels, and strong support at 24,000.

Conclusion and Recommendation

Given the current market setup, the Nifty’s ability to close and sustain above the 24,400 mark will be crucial for further upside towards 24,700 and beyond. Traders should closely watch the 24,400 level for potential breakout or rejection. A failure to sustain above this level could lead to continued consolidation within the 24,100-24,000 zone. The bearish candlestick pattern on the daily chart suggests caution, while the Hammer-like pattern on the weekly chart provides some hope for a potential reversal.

Recommendations:

• For Bulls: Consider going long if the Nifty breaks and sustains above 24,400, with a target of 24,700. Tight stop-losses around 24,000 are advised.
• For Bears: Watch for rejection at 24,400 and consider short positions with targets around the 24,100-24,000 support zone.
• Options Traders: Focus on the 25,000 strike for potential Call writing, and the 24,000 strike for Put writing, as these levels are showing the highest open interest and could guide the market’s direction.

Disclaimer

The above analysis is for informational purposes only and should not be considered as investment advice. Trading in the stock market involves risk, and you should consult with a qualified financial advisor before making any investment decisions.

Nifty 50 Market Sentiments Report for August 13

Post Market Analysis – August 12:

On August 12, the Nifty 50 displayed resilience amidst the ongoing concerns over the Hindenburg allegations. The index showed a smart recovery from the day’s low, ultimately closing with a minor loss of 21 points at 24,347. Despite the pressure, the Nifty managed to remain above the 5-day Exponential Moving Average (EMA) at 24,318 but failed to close above the 21-day EMA at 24,391. This signals a consolidation phase that may continue unless the index decisively breaks above the 24,400 level. The immediate support lies within the 24,300-24,200 zone, while a breach above 24,400 could push the index towards 24,700.

A notable formation observed on the daily charts was a small bullish candlestick pattern with long upper and lower shadows, resembling a High Wave candlestick pattern. This pattern typically indicates upcoming volatility, a sentiment reinforced by the negative momentum indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD).

Open Interest (OI) Data Analysis:

Resistance Levels:

1. The resistance based on pivot points is situated at 24,444, 24,505, and 24,605.
   1. Maximum open interest (OI) on the Call side was seen at the 25,000 strike, with 1.25 crore contracts, followed by the 25,500 (65.39 lakh contracts) and 24,800 (50.55 lakh contracts) strikes.
   1. Significant Call writing was observed at the 25,000 strike, which added 38.03 lakh contracts, making it a formidable resistance level in the near term.

Support Levels:

1. The support based on pivot points is identified at 24,244, 24,183, and 24,083.
   1. On the Put side, the 23,500 strike holds the maximum OI with 54.47 lakh contracts, positioning it as a key support level. It was followed by the 24,000 strike (51.91 lakh contracts) and the 24,300 strike (39.51 lakh contracts).
   1. Maximum Put writing was observed at the 23,500 strike, with an addition of 19.66 lakh contracts, reinforcing the 23,500 level as a critical support zone.

Put-Call Ratio (PCR):

The Nifty PCR fell slightly to 1.03 from the previous session’s 1.09, indicating a balanced sentiment with a slight bearish tilt. A PCR above 0.7 generally suggests bullish sentiment, while a ratio below 0.7 indicates a bearish outlook. The current PCR suggests caution, with traders slightly leaning towards a defensive stance.

Volatility:

The India VIX, which measures market volatility, increased by 3.47 percent, reaching 15.87 from 15.34 in the previous session. The rising VIX, moving closer to the 16 mark, signals caution for the bulls, indicating potential market swings in the near term.

Conclusion and Recommendations:

The Nifty 50 remains in a consolidation phase, with the 24,400 level emerging as a critical resistance point. A decisive break above this level could see the index move towards the 24,700 mark, while a failure to sustain above 24,400 might prolong the consolidation within the 24,300-24,200 zone. The market is expected to remain volatile, as indicated by the High Wave candlestick pattern and the rising VIX. Traders are advised to monitor the 24,400 level closely, as well as the 25,000 strike’s OI data for resistance and the 23,500 strike’s OI data for support.

Disclaimer: This report is for informational purposes only and does not constitute financial advice. Market conditions can change rapidly, and trading involves significant risk. Please consult with a qualified financial advisor before making any trading decisions. The author of this report is not responsible for any losses incurred as a result of using this information.

Nifty 50 Pre-Open  Analysis  for August 14

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Post-Market Analysis for August 13

On August 13, bears dominated Dalal Street, causing the benchmark indices to decline by nearly nine-tenths of a percent. The Nifty 50 index dropped 208 points to close at 24,139, finding support at 24,100. The market’s structure appears weak, with experts suggesting that the index may remain in a consolidation and rangebound mode as long as it holds above the 24,000 level. The immediate hurdle on the higher side is at 24,500, and a break on either side (24,000-24,500) is likely to determine the next direction for the index.

Resistance and Support Levels (Based on Pivot Points)

• Resistance: 24,298, 24,356, 24,449
• Support: 24,112, 24,055, 23,962

Special Formation

In the previous session, Nifty formed a High Wave pattern, followed by a bearish candlestick pattern on the daily charts. Momentum indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) remain in negative territory, reinforcing the bearish sentiment.

Pre-Open Open Interest (OI) Data for August 14

Call Options:

• Maximum Open Interest: 25,000 strike (1.26 crore contracts) – Key resistance level
• Significant Levels: 24,500 strike (93.64 lakh contracts), 24,400 strike (84.31 lakh contracts)
• Maximum Call Writing: 24,300 strike (51.09 lakh contracts), followed by 24,500 (46.5 lakh contracts) and 24,200 (44.02 lakh contracts)
• Maximum Call Unwinding: 25,200 strike (shed 2.27 lakh contracts), followed by 25,100 (shed 1.48 lakh contracts) and 24,900 (shed 57,600 contracts)

Put Options:

• Maximum Open Interest: 23,500 strike (67.48 lakh contracts) – Key support level
• Significant Levels: 24,000 strike (52.11 lakh contracts), 23,000 strike (41.79 lakh contracts)
• Maximum Put Writing: 23,900 strike (14.8 lakh contracts), followed by 23,700 (13.85 lakh contracts) and 23,500 (13 lakh contracts)
• Maximum Put Unwinding: 24,300 strike (shed 16.79 lakh contracts), followed by 24,400 (shed 16.44 lakh contracts) and 23,000 (shed 10.28 lakh contracts)

Nifty Put-Call Ratio (PCR)

• The PCR fell to 0.78 on August 13 from 1.03 levels in the previous session. This decline indicates an increase in bearish sentiment as traders sold more Call options than Put options.

Volatility

• The India VIX rose 1.89 percent to 16.17, up from 15.87 levels. The increase in volatility favours the bears, and as long as the VIX remains above the 15 mark, bulls need to exercise caution.

Conclusion and Recommendations

The Nifty 50 is likely to remain rangebound between 24,000 and 24,500 in the near term. A break on either side of this range could determine the next significant move in the market. The resistance at 24,500 and support at 24,000 are crucial levels to monitor. Given the rising volatility and bearish sentiment, traders should be cautious and consider deploying hedging strategies to protect their positions.

Recommendations:

• Short-Term Traders: Watch for a break above 24,500 or below 24,000 for clear direction. Consider selling Call options at resistance levels or buying Put options if the index breaches the support level.
• Long-Term Investors: Maintain a cautious stance and avoid aggressive buying until the market shows signs of stabilization.
• Hedging: Utilize options strategies like straddles or strangles to hedge against potential volatility.

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Disclaimer: The information provided in this report is for educational purposes only and should not be construed as financial advice. Trading in financial markets involves risk, and you should consult with a qualified financial advisor before making any investment decisions. The authors of this report are not responsible for any financial losses that may occur as a result of using this information.

Nifty 50 Sentiment Report for August 16

1. Post Market Analysis – August 14

On August 14, the Nifty 50 index experienced a moderately positive close after a highly volatile session, managing to sustain above the critical 24,100 level. This level is crucial, as it serves as a significant threshold that dictates the market’s short-term trajectory. As long as the index holds above 24,100, a potential upward movement towards the immediate resistance levels between 24,200 and 24,300 is possible. However, a breach below 24,100 could lead to a decline towards the next immediate support level at 24,000.

A notable observation from the daily charts is the formation of a small bearish candlestick pattern, continuing the recent trend of lower highs and lower lows. This bearish sentiment is further reinforced by the weekly chart, which also displays a bearish candlestick pattern with an upper shadow. Despite these bearish formations, the RSI (Relative Strength Index) indicates a negative bias, but the index has managed to hold on to the 10-week EMA (Exponential Moving Average).

2. Pre-open OI Data Analysis

According to the weekly options data, the maximum open interest was concentrated at the 24,200 strike price, with 1.01 crore contracts. This level is likely to act as a significant resistance in the near term. Following this, the 25,000 strike (1 crore contracts) and the 24,500 strike (60.8 lakh contracts) also represent crucial levels to watch.

On the Call side, there was substantial writing at the 24,200 strike, with an addition of 46 lakh contracts, indicating that this level is being strongly defended. Additionally, the 24,100 and 25,400 strikes saw an increase in contracts by 5.66 lakh and 1.33 lakh, respectively. The maximum unwinding of Call options was observed at the 24,500 strike, which shed 32.83 lakh contracts, suggesting a shift in sentiment at that level.

On the Put side, the 24,100 strike holds the maximum open interest, with 78.35 lakh contracts, making it a key support level. The 24,000 and 23,500 strikes also hold significant open interest, with 59.91 lakh and 50.35 lakh contracts, respectively. Notably, the 24,100 strike saw the highest Put writing, with an addition of 43.56 lakh contracts, reinforcing the support at this level.

The Nifty Put-Call Ratio (PCR) rose to 1.14 on August 14, up from 0.78 in the previous session, indicating a bullish shift in market sentiment. A higher PCR typically suggests that more traders are buying Put options compared to Call options, which often correlates with an expectation of market strength.

3. Market Sentiment

The market sentiment as of August 14 shows a cautious optimism. While the index has managed to sustain above the critical 24,100 level, indicating potential for an upward move, the formation of bearish candlestick patterns and the RSI’s negative bias suggests underlying concerns among traders. The elevated Put-Call Ratio further underscores a bullish sentiment, albeit tempered by the current technical indicators.

Volatility, as measured by the India VIX, declined by 4.53% to 15.44 from 16.17 levels. Although this drop in volatility is a positive sign for bulls, the VIX remains above the comfort level of 15, which may continue to keep market participants on edge.

4. Resistance and Support Levels

Resistance Levels:

• Immediate resistance at 24,200-24,300
• Based on pivot points: 24,184, 24,207, 24,243
• Additional resistance at 25,000 based on open interest

Support Levels:

• Immediate support at 24,000
• Based on pivot points: 24,110, 24,087, 24,050
• Additional support at 23,500 based on open interest

5. Conclusion and Recommendation

The Nifty 50’s ability to hold above the 24,100 level is critical for any upward movement. A sustained break above this level could lead to a rally towards the 24,200-24,300 resistance zone. However, if the index falls below 24,100, it may test the 24,000 support level. Traders should closely monitor the 24,100 level for any signs of weakness or strength.

Given the current market conditions, with a mix of bearish candlestick patterns and a rising Put-Call Ratio, a cautious approach is advisable. Traders may consider taking long positions if the index sustains above 24,100 with a target of 24,200-24,300, while maintaining a strict stop-loss just below 24,000. Conversely, if the index breaches 24,100 decisively, short positions could be initiated with a target of 24,000.

6. Disclaimer

This report is for informational purposes only and should not be construed as financial or investment advice. The analysis and recommendations provided are based on historical data and technical indicators, which are subject to change. Market conditions can fluctuate, and past performance is not indicative of future results. Traders and investors should conduct their own research and consult with a financial advisor before making any trading or investment decisions.