Breather expected after Friday's Blood Bath

Market Setup
Gift Nifty was showing a gap up by 70 points at 6.30 AM today morning..

Dow closed higher by 601 points, NASDAQ closed higher by 302 points and S&P 500 closed the day higher by 92 points in Friday’s trade.

Today morning, Asian Markets are trading lower with Nikkei 225 up by 415 points, Kospi down by 84 points and Today Morning DOW futures are trading lower by 62 point. Nasdaq futures are also trading lower by 33 points. Hang Seng Futures are trading higher by 146 points. Taking cues from Gift Nifty, Nifty will open at about 22200 level.

FII have today sold 11,639 Crore of stock in cash market on Friday. Last FII sold this amount in the cash market was in 28th. November 2024. This is the very large amount and FII have compensated for the small amount of sales cash market on Thursday. FII are particularly bearish in Nifty50 and are Neutral in Nifty Bank. Taking into account the data, FII are still carry a bearish sentiment in Indian Markets.

As reported in our report for Friday’s, the bearish sentiment continued from Thursday’s trade, coupled with bearish data and weak sentiments from the US markets, there was no respite for our markets in Friday’s Trade. The data for today also carries a bearish sentiment especially for Nifty50. A gap has been left between 22508, which is the low of Thursday and 22450, which is the high of Friday’s. We will have to wait and see when this can this be filled. All the immediate moving averages of 10 and 20 period of Daily, Weekly and Monthly are far away. The immediate support is 100 Weekly Exponentially Moving Average placed at 21852. Now the 20 Monthly Exponential Moving average placed at 22420 and the swing low of third week of May 2024 have been convincingly broken and will now act a resistance. India Vix has increased to 13.91 but still remains well within the comfortable zone. A watch has to be kept on 22200 levels. Put writers have a slight advantage with 4.094 million puts against the call writers with 4.020 million calls at 22200. This can change very quickly. As Nifty50 will open around this level, a watch will have to be kept on the OI build up of calls and puts. Any build up of puts will take Nifty50 above 22200 levels and any build up of calls will keep Nifty50 below 22200 level. Overall today would be a range bound session. It still remains a sell on rise markets.

Nifty Bank is a shade better than Nifty50. Though there is a short build up of Index Futures, it is not as severe as in Nifty50, which is very evident from Friday’s price action. Some strength can be found in Nifty Bank as HDFC Bank rallied by 1.86% in the falling market. 20 Monthly Exponential Moving Average placed at 48209 will be a strong support. With 1.114 million puts 48000 is the immediate support and with 1.080 million calls, 49000 is the immediate resistance. On the lower side now 47881 levels are open, which is the swing low of 27th. Jan 2025. Expect a range bound session between 48500 to 49000.

Previous session
Nifty opened gap down by 122 points at 22568 and Bank Nifty opened gap down by 306 points at 48732.

After the gap down opening, the selling pressure was so intense that Nifty50 could not recover throughout the trading day. As reported in our Friday report, a wait-and-watch policy for the first 30 minutes would have been the most prudent course of action. It was also reported that any break below 22500 would leave no meaningful support till 22000. Nifty50 did make an intraday low of 22104, to finally end the day at 22124. It is a very bad closing for Nifty50, as the bears have literally overpowered the bulls. Nifty50 has now convincingly broken the 10 and 20 Monthly Exponential Moving Averages, which are placed at 23358 and 22372 respectively. The nearest 10 and 20 DEMA are now placed at 22577 and 22830 respectively. Only 5 stocks out of Nifty 50 stocks closed the day in green.

Nifty Bank was on a different path from Nifty50 in Friday's trade. After opening gap down, selling pressure was evident in Nifty Bank as well. Nifty Bank took support at around 48100 level to rebound to its intraday high of 48574, only to fall once again to its intraday low of 48078 and finally close the day at 48344. The selling pressure evident in Nifty50 stocks was not present with such severity in Nifty Bank. It's not that bad a closing for Nifty Bank. 2 out of 12 Nifty Bank stocks closed the day in green.

It was a bad day for the other Sectoral Indices. All the sectoral indices closed the day in red with IT and Auto stocks leading the Nifty50 stocks down. The losers were, Nifty Next 50 (-2.90%), Nifty Mid Select (-1.70%), Nifty Midcap100 (-2.49%), Nifty IT (-4.18%), Nifty Metal (-1.39%), Nifty Auto (-3.92%), Nifty FMCG (-2.62%), Nifty Consumer Durables (-2.38%), Nifty Pharma (-1.92%), Nifty Realty (-1.41%), Nifty CPSE (-1.70%), Nifty PSE (-2.61%), Nifty Oil & Gas (-2.22%), Nifty Small Cap 100 (-3.11%) and Fin Nifty (-0.62%).

Options Chain
Nifty50 (expiry March 6)

Nifty50: Some put writing was seen from Strike 22300 downwards till 21500. Not much support was visible below 21800 as there was not much conviction among put writers. Aggressive call writing was visible from 22200 onwards till 22500. As visible from the chart below, the addition of calls was much more than the addition of puts. The immediate support is at 22000 and immediate resistance is at 22300. The IV on the put side is 12.30 and is 14.57 on the call side.

 
 

Nifty Bank (expiry March 27)
The option chain for March 27 was very evenly placed between the call and put writers. Call and put writing is visible at ATM (At The Money) and some writing was also visible at every strike on either side. The immediate support is 48000 and resistance is 49000. The IV (Implied Volatility) on the put side is 16.35 and is 15.09 on the call side.

Support and resistance

• Nifty50: Major support at 21800; major resistance at 22500.
• Nifty Bank: Major support at 48500; major resistance at 49000.
• Sensex: Major support at 73000; major resistance at 73500.  

Put-call ratio; at-the-money

• Nifty: Overall 0.70; ATM 0.90 (bearish)
• Bank Nifty: Overall 0.9; ATM 1.51 (neutral to bullish)
• Sensex: Overall 0.6; ATM 1.21 (neutral to bullish)