Derivatives data shows narrow range; 22100 in focus for Nifty

Market Setup

Gift Nifty indicated a 40-point decline at 6:30 AM today.  

 

 

Foreign funds likely sold ₹34.86 billion of stock in cash market on Tuesday. Relentless selling by FIIs continues, which is equally matched by the domestic institutional investors. 

Taking into account the data, FII are still carry a bearish sentiment in Indian Markets. 

With Asian markets showing only limited reaction to Tuesday’s US market fall, today’s session in India could turn into an interesting one

The successful defence of the 22000 level by the bulls Tuesday indicates an immediate bounce is likely if Nifty50 opens gap down today. The critical level to watch is 22100. Open interest data shows 5.145 million puts and 4.894 million calls at this level, indicating a narrow difference. Any fresh put build-up could lift Nifty50 above 22100, while additional call writing could cap gains below this level.

All immediate moving averages for the 10- and 20-period across daily, weekly, and monthly timeframes remain far away. Immediate support stands at the 100-week exponential moving average at 21897, while the 20-month exponential moving average at 22345 now acts as resistance. India VIX has risen to 13.83 but remains comfortably within the acceptable zone. Today’s trade is likely to stay range-bound, with support at 22000 and resistance at 22200. The broader setup continues to favour sell-on-rise trades.

Nifty Bank was a shade better than Nifty50 in Tuesday’s trade. HDFC Bank, along with State Bank of India, led the charge for Nifty Bank. FIIs remained bullish on index futures in Nifty Bank. Though data suggests a range-bound day, some upward movement is possible.

As reported Tuesday, the 20-month exponential moving average at 48212 will act as strong support. With 1.078 million puts, 48000 acts as immediate support, while 1.129 million calls make 49000 immediate resistance.

Expect a range-bound session with a bullish bias in Nifty Bank. On the lower side, 47881 remains open — the swing low of 27 January 2025. The broader setup continues to favour sell-on-rise trades.

Previous Session
Nifty50 opened down 144 points at 21,974, while Bank Nifty opened 171 points lower at 47,942.

Nifty50 hit its intraday low of 21,964 in the opening minutes, followed by a quick recovery, as expected in Tuesday’s report, taking it to 22,105.

By 10 AM, the momentum faded, and the index traded in a narrow 70-point range between 22,035 and 22,105 for the rest of the session, closing at 22,082.

Despite the weak start, put writers showed strong conviction from the outset, with aggressive put writing keeping Nifty50 above 22,000 through the day.

Sensex expiry was uneventful, with no major moves.

The session ended evenly, with neither bulls nor bears in control. Nifty50 now seems to be settling into a 22,000 to 22,200 range for the next couple of days.

Out of 50 Nifty stocks, 22 closed in the green.

 

 

 

Nifty Bank mirrored Nifty50’s movement on Tuesday. After opening down, it slipped to the day’s low of 47,935 in the opening trades. As expected in Tuesday’s report, strength in HDFC Bank and State Bank of India lifted Nifty Bank to an intraday high of 48,370.

Momentum remained weak, with the index grinding between 48,130 and 48,370 — a narrow 240-point range — for the rest of the session before closing at 48,285. Put writers showed strong conviction at 48,000, where fresh put writing emerged despite the lower open. It was a positive close for Nifty Bank — not only was 48,000 held, but the index managed to close well above it.

Six of the 12 Nifty Bank stocks ended in the green. 

Options Chain
Nifty50 (expiry March 6)
The option chain shows balanced positioning between call and put writers. Put writers hold firm conviction at 22,000, with fresh positions built from 22,100 down to 21,500 on Monday, while some unwinding was seen at 22,200. On the call side, fresh writing emerged from 22,000 to 22,500, with rolls shifting lower from 22,400 to 22,200. Implied volatility stands at 16.28 for puts and 13.96 for calls, reflecting slightly higher caution on the downside.

Nifty Bank (expiry March 27)
Not much changed on Tuesday. The option chain for March 27 remained evenly balanced between call and put writers, with writing concentrated at at-the-money strikes and visible across multiple strikes on both sides. Implied volatility stands at 16.46 for puts and 14.67 for calls, indicating a slightly cautious undertone.

Sensex (expiry March 11)
Tuesday was the expiry of the Sensex weekly contracts. The option chain has not been fully formed as yet. No inference can be drawn from Tuesday’s option chain.

Support and resistance
 - Nifty50: Major support at 21900; major resistance at 22200
 - Nifty Bank: Major support at 48000; major resistance at 49000.
-  Sensex: Tuesday was the weekly expiry. Option chain not formed.

Put-call ratio; at-the-money
 - Nifty50: Overall 0.80; at-the-money 0.92 (bearish to neutral)
 - Nifty Bank: Overall 1.00; at-the-money 1.40 (neutral to bullish)
- Sensex: No option chain available due to Tuesday’s weekly expiry.