Relief Rally

Market Setup

Gift Nifty was down of 8 points at 6.30 IST today.

On Wednesday, the Dow rose 485 points, NASDAQ 267 points, and the S&P 500 added 64 points. In  the Asian trade today, the Nikkei 225 rose 465 points and the Kospi by 16 points. Dow futures slipped by 13 points, Nasdaq futures by 35 points and the Hang Seng futures jumped 938 points.

Taking cues from Gift Nifty, Nifty will likely open at Wednesday’s close of 22337.

Foreign institutional investors sold ₹28.95 billion of stock in the cash market on Wednesday. There was no respite in FII selling. Domestic institutional investors continued to buy, purchasing ₹33.71 billion of stock in the cash market.

With the addition of long positions in index futures and options, FIIs turned bullish in the derivatives segment on Wednesday. However, taking the overall data into account, FII sentiment towards Indian markets remains bearish.

As noted Wednesday, markets rebounded after a gap down. The rebound gathered momentum, aided by short covering. This combination triggered a relief rally during Wednesday’s trade.

The Nifty50 weekly contracts will expire today.

Nifty50 faced resistance at the 20-month exponential moving average at 22,369, and this is likely to continue acting as resistance today. With the 100-week exponential moving average at 21,900, this level will act as a major support for Nifty50.

The conviction level of put writers is visible at 22,200, while call writers hold firm at 22,500. These levels — 22,200 to 22,500 — are likely to define the range for today’s weekly expiry of Nifty50.

India VIX fell to 13.67 and remains well within the comfortable zone. The market continues to favour a sell-on-rise setup.

Nifty Bank failed to mirror the momentum seen in Nifty50. Although Nifty Bank’s close was better than Nifty50 in Tuesday’s trade, the momentum did not carry forward into Wednesday’s session.

Foreign institutional investors remained bullish in index futures for Nifty Bank. While data suggests a range-bound day today, some upward movement can be expected. The 20-month exponential moving average at 48,209 will likely act as strong support, while the 10-day exponential moving average at 48,639 will act as resistance.

With 1.143 million puts, 48,000 acts as immediate support from put writers, while 1.190 million calls make 49,000 the key resistance level for call writers.

Expect a range-bound session with a bullish bias in Nifty Bank. On the lower side, 47,881 remains open — the swing low from 27 January 2025. The broader setup continues to favour a sell-on-rise strategy.

Previous Session
Spot

Nifty50 opened gap down by 10 points at 22,073, while Bank Nifty opened 4 points lower at 48,241.

As noted Wednesday, an immediate upmove followed the slight gap down opening. The momentum gained in the early morning sustained throughout the session. A short-covering rally lifted Nifty50 to an intraday high of 22,349 before closing at 22,337 with a gain of 254 points.

Forty five of the 50 Nifty stocks ended the day in the green.

 

Nifty Bank moved in tandem with Nifty50. After opening gap down, Nifty Bank rallied to an intraday high of 48,657, where it faced resistance near the 10-day exponential moving average at 48,672. The index gave up some gains and closed at 48,489, up 244 points.

Selling pressure was seen in HDFC Bank, while the rally was led by Kotak Bank and supported by State Bank of India and Axis Bank.

Nine of the 12 Nifty Bank stocks ended the day in the green.

Options Chain
Substantial put writing was visible at every level from 22,400 down to 22,000. The conviction of call writers weakened during Wednesday’s trade, with calls rolled up from 22,500 to 22,600.

The conviction of put writers was also evident in the bar pyramid chart. With 1.127 million puts, 22,200 now acts as a key support, while 1.150 million calls make 22,600 the major resistance.

Implied volatility stands at 18.01 on the put side and 16.14 on the call side.

NIFTY50 Pyramid Chart

 

Nifty Bank (expiry March 27)

There was little change in the Nifty Bank option chain on Wednesday. Positions remained evenly balanced between call and put writers. Writing was visible at the at-the-money strike, with activity also seen across multiple strikes on both sides.

Implied volatility stood at 16.00 on the put side and 14.16 on the call side.

Sensex (expiry March 11)

 Wednesday, put writers created positions at every level from 73700 till 70000. Similarly call writers built positon from 73500 till 74500 .

Support and Resistance

• Nifty50: Major support at 22000; major resistance at 22600
• Nifty Bank: Major support at 48000; major resistance at 49000.
• Sensex: Major support at 73000; major resistance at 74000.

Put-call ratio; at-the-money

• Nifty50: Overall 1.00; ATM 0.90 (neutral to bullish)
• Nifty Bank: Overall 1.0; ATM 1.23 (neutral to bullish)
• Sensex: Overall 0.9; ATM 1.18 (neutral to bullish)