Calm before the storm

Gift Nifty was down by 20 points at 6.30 IST today. On Friday, the Dow gained 222 points, NASDAQ 126 points, and the S&P 500 added 32 points. In Asian trade today, the Nikkei 225 fell 97 points and the Kospi is up by 5 points. Dow futures are down by 275 points, Nasdaq futures down by 208 points and the Hang Seng futures jumped 40 points.

Taking cues from Gift Nifty, Nifty will open at about 22525 - 22550. 

FIIs sold ₹₹ 20.35 billion of stock and DIIs bought ₹ 23.20 billion of stock in cash market on Friday. There is still no respite in selling by FIIs, who have already sold ₹ 15.5 billion worth of stocks so far  this month. With addition of shorts index futures and options, FIIs were bearish in the derivative segement on Friday. 

After Friday’s closing, Nifty50 is sandwiched between 10 and 20 DEMA placed at 22500 and 22675. The 20 Monthly Exponential Moving Average for Nifty50 is placed at 22389.  

With a slight gap down or a flat opening opening, Nifty50 will open above the put writers zone of 22500. Nifty50 is also well supported by 10 DEMA at 22489 and 20 Weekly Exponential Moving Average. Important averages will act as a support at their respective levels. A rangebound day can be expected for Monday’s trading session. India Vix has risen to 13.73 and is well within the comfortable zone. 

Nifty Bank does not share the momentum in Nifty50. FII are bearish on Nifty Bank. Though the data suggests a range-bound day, up moves can be expected in Nifty Bank. 20 Monthly Exponential Moving Average placed at 48236 will be a strong support and  resistance will be at the the 10 DEMA of 48611. With 1.223 million puts, 48000 is the support for put writers and with 1.322 million calls, 49000 is the resistance for call writers. On the lower side now 47881 levels are open, which is the swing low of January 27.  

Previous Session
SpotNifty50 opened gap down by 36 points at 22508, while Bank Nifty opened 1634 points lower at 48,463.
Nifty50 made a low of 22464, took support from 20 WEMA, and rebounded to a high of 22633 before closing at 22552. India VIX roseto 13.73, which indicated a comfortable zone. Data suggested a neutral stance with a bearish bias. The market closed above 10 DEMA, which would now act as support.

Support and resistance levels were initially derived from moving averages. Put writers were firm at 22500 levels, whereas call writers were active at 22600 levels for Nifty50. The market was in a consolidation scenario. 23 stocks out of Nifty 50 stocks closed the day in green.

As mentioned on Friday, Nifty Bank slipped lower to 48350 levels. Nifty Bank rebounded to breach 10 DEMA and reach its intra-day high of 48709. Nifty Bank could not carry the momentum and slipped lower to close the day at 48359 with a loss of 250 points from the day’s high. Nifty Bank has now closed the important level of 10 DEMA at 48590. Four out of 12 Nifty Bank stocks closed the day in green.
 
Options Chain
Nifty50 (expiry March 13)
The option chain was evenly balanced. As evident from the pyramid chart, put writers have taken a firm grip on strikes below 22500 and call writers have an even grip from 22600. Fresh call and put writing has taken place on every stike. With 6.672 million puts 22500 is the initial support and with 8.366 million puts 22300 is the major support. With 4.317 million calls 22600 is the initial resistance and with 8.385 million calls 22800 will be act as a major resistance. The IV for puts is 12.27 and 11.19 for calls.

 

Nifty Bank (expiry March 27)
There was not much change from Thursday’s trade. Additional put writing occurred from 48500 downwards to 48000. Additional call writing commenced from 48500. The option chain was balanced between call and put writers. Immediate resistance was at 49000 (1.547 million calls). Support was at 48000 (1.306 million puts). The range was between 48000-49000. Implied Volatility for puts was 15.71, while for calls it was 13.73.

Sensex (expiry March 11)
The option chain was in favour of call writers. Call writing was not matched by put writing. Immediate support was at 74000 (0.513 million calls). Immediate resistance was at 75000 (0.758 million puts). The range was between 74000–75000. Implied volatility for puts was 10.74, while for calls it was 10.35.

Support and Resistance
 - Nifty50: Major support at 22500; major resistance at 22800
 - Nifty Bank: Major support at 48000; major resistance at 49000. 
 - Sensex: Major support at 74000; major resistance at 75000.

Put-call ratio; at-the-money
 - Nifty50: Overall 1.10; ATM 0.93 (neutral to bullish)
 - Nifty Bank: Overall 1.0; ATM 1.12 (neutral to bullish)
 - Sensex: Overall 1.4; ATM 0.98 (neutral to bullish)