Lower lows on daily basis not encouraging

Gift Nifty was showing a gap down gap down by 150 points at 6.30 AM today morning.

The Dow closed lower by 192 points, Nasdaq  closed down 530 points and S&P 500 closed down 94 points in yesterday’s trade. Today morning, Asian markets are trading lower with Nikkei 225 down by 900 points, Kospi down by 48 points and Dow futures down 25 points. Nasdaq futures are also trading up 30 points. Taking cues from Gift Nifty, Nifty50 will open at about yesterday’s close of 22400.

FIIs sold ₹ 5.57 billion of stock in cash market on Thursday. While the amount is small, they have consistent sellers and continue to have a bearish view.

During Thursday’s trade the markets as predicted were flat and traded in a range of 50 points during the entire day. India Vix further fell to 13.31 and is within the comfortable zone. The monthly expiry of Nifty50 and Nifty Bank was near the day at the lowest point of the day. Sudden selling in the last 40 minutes of trade has given a bearish sentiment to the market. All the sectorial indices are also deep in red. This is the fifth consecutive month that Nifty50 will close in the red, a first in 28 years. The last was in 1996. Nifty50 is approaching 20 Monthly Exponential Moving average placed at 22413. This is also the zone which is the swing low of third week of May 2024. A watch has to be kept on 22500 level. Put writers have a slight advantage with 5.045 million puts against call writers with 3.392 million calls at 22500. This can change very quickly. A wait-and-watch policy for the first 30 minutes of today’s morning trade is a must to gauge the direction of the market. Put writers have no conviction till 22000. It still remains a sell on rise markets.

Nifty Bank as predicted was rangebound throughout the day on Thursday. However, Nifty Bank’s close at the lower point of the day is not good. A wait-and-watch policy for the first 30 minutes of trade in Nifty Bank could help  gauge the sentiment of the market. As it is the first day of the new monthly trading month, no definite clues are available from the option chain. On the lower side now 47881 levels are open, which is the swing low of January 27.

Options Chain
Nifty50 (expiry March 6)
Not much can be said for yesterday’s option chain. In the option chain for March 6, some put writing was seen 22500 level downwards till 22000. Not much support was visible below 22500 as put writers lacked conviction. Aggressive call writing was visible from 22500 till 23000. Every level after 22500 had substantial call writing, which will act as resistance. The IV for puts was 11.46 and 2.30 for call options.

Nifty Bank (expiry March 27): The option chain for March 27 expiry is evenly placed between the call and put writers. Call and put writing is visible at ATM and not much thereafter. This is because of the monthly expiry. The IV for puts was 14.08 and 15.41 for call options.

Support and resistance
 - Nifty50: Major support at 22500; major resistance at 23000.
 - Nifty Bank: Major support at 48000; major resistance at 49000.
 - Sensex: Major support at 74500; major Resistance at 75000.

Put-call ratio and at-the-money
 - Nifty50: Overall 0.80 ; ATM 0.89 (bearish)
 - Nifty Bank: Overall 0.9; ATM 1.33 (neutral to bullish)
 - Sensex: Overall 0.9; ATM 0.97 (neutral)

Previous Day
Nifty50 opened gap down 21 points at 22568 and Bank Nifty opened gap up 123 points at 48732.After opening gap down, Nifty50 faced selling pressure and continued its downward journey towards 22500 levels. As mentioned on Thursday, Nifty50 traded in a range of 50 points between 22515 and 22565. Sudden selling pressure was seen in the last 10 minutes of trade, which drove Nifty50 to its intraday low of 22508, to finally close the day at 22545. While Nifty50 closed the day at 22512, the adjusted closing saw Nifty50 closing at 22545. It was not a good closing for Nifty50, as it closed the day at the lowest point of the trading range. Out of Nifty50 stocks, 18 closed in the green.

Nifty Bank after opening gap up continued with the momentum and reached its intraday high of 48972. As mentioned on Thursday, Nifty Bank could not breach 49000 and traded in a range of 125 points from 1030IST. In the last 30 minutes of trade, Nifty Bank faced selling pressure, losing 300 points to reach its intraday low of 48628 and to close the day at 48743. While Nifty Bank closed at 48641,the adjusted closing was 48743. It was not a good closing for Nifty Bank, as it closed the day at the lowest point of the trading range today. Of 12 Nifty Bank stocks, six closed the day in the green.

It was a bad day for most of the other sectoral indices. The notable gainers were Nifty Metal (+0.50%) and Fin Nifty (+0.60%). The notable losers were Nifty Next 50 (-0.92%), Nifty Mid Select (-0.89%), Nifty Midcap100 (-0.64%), Nifty IT (-0.47%), Nifty Auto (-1.51%), Nifty FMCG (-0.76%), Nifty Consumer Durables (-0.78%), Nifty Realty (-2.09%), Nifty CPSE (-0.73%), Nifty PSE (-0.99%), Nifty Oil & Gas (-0.43%), Nifty Pharma (-0.24%) and Nifty Small Cap 100 (-1.64%).