Nifty50 weekly expiry seen weak

On Wednesday, the Dow lost 82 points, Nasdaq gained 212 points, and the S&P 500 gained 27 points. In the Asian trade today, the Nikkei 225 is up by 497 points and the Kospi is up by 22 points. Dow futures are up by 42 points; Nasdaq futures up by 52 points and the Hang Seng futures are down by 174 points. Taking cues from Gift Nifty, Nifty50 will open at about 22500. FIIs sold  ₹16.28 billion worth of stock and DIIs bought ₹15.10 billion. With addition of shorts in index futures and options, FIIs are bearish in the derivative segment during Wednesday’s trade.

Today is the expiry of Nifty50 weekly contracts. Nifty50 should carry the momentum of Wednesday’s trade into Thursday. With a slight gap up opening, Nifty50 will open just over the 10 DEMA placed at 22,483 and right into the zone of call writers at 22,500. Yesterday’s high of 22,577 is also high point of the zone for call writer’s at 22,500. Strong support is seen at 22,384, the 20 MEMA.. According to derivatives data, with 9.442 million puts, 22,300 appears to be the initial support and 22,000 is the major support with 10 million puts. With 10.80 million calls 22,600 might be the initial resistance and with 13.30 million calls, 23,000 might be a major resistance. The range of Nifty50 for the expiry seems to be between 22,300 and 22,600. India Vix is down to 13.69, indicating a decrease in volatility in the markets.

Nifty Bank is a shade better than Nifty50 and has shown signs of strength. FIIs have added long positions in Nifty Bank futures. With a better closing on Wednesday, data suggests that the conviction of put writers is still strong at 48,000 and no put unwinding was witnessed at 48,000 during Wednesday’s trade. With a flat opening and conviction of put writers at 48,000, a wait-and-watch policy should be used in today’s trade. One should observe the price action in the first 30 minutes of today’s trade, to let Nifty Bank settle and then gauge the direction of the markets.. The 100 Weekly Exponentially Moving Average of 47,546, will be a strong support, 20 Monthly Exponential Moving Average placed at 48,194 will be a strong resistance. Nifty Bank will have be watched for the 48,000 level. If 47,700 is breached, it can trigger short covering which can take Nifty Bank down to 47,500. With 1.228 million calls, 48,500 is the immediate resistance; and with 1.84 million calls, 49,000 is the major resistance. With 1.447 million puts, 48,000 is the immediate support. The range of Nifty Bank is expected between 47,500-49,000.

The Sensex option chain appears to be slightly tilting in favour of call writers, which is also reflected in the put-call ratio. The initial 10 to 15 minutes of trade should be watched for the build up of open interest at 74,000. A build up of puts will act as support and a build-up of calls will act as resistance. With 245,000 puts, 74,000 is the major support and there is no meaningful support below it. With 266,000 calls, 74,000 is the major resistance. The initial support for Nifty50 appears to be 22,300 with 9.442 million puts and 22,000 as the major support with 10 million puts. Initial resistance is seen at 22,600 with 10.80 million calls and 23,000 could be a major resistance with 13.30 million calls. The range of Nifty50 for the expiry seems to be between 22,300 and 22,600. 

Nifty Bank will have be watched for the 48,000 level. If 47,700 is breached, it can trigger short covering which can take Nifty Bank down to 47,500. With 1.228 million calls, 48,500 is the immediate resistance; and 49,000 is the major resistance with 1.84 million calls.. With 1.45million puts, 48,000 is the immediate support. Nifty Bank is expected to be between 47,500-49,000.

The Sensex option chain appears to be slightly tilting in favour of call writers as reflected in the put-call ratio. The initial 10 to 15 minutes of trade should be watched for the build up of open interest at 74,000. With 245,000 puts for Nifty Bank, 74,000 is the major support; and there is no meaningful support below this. With 266,000 calls, 74,000 is the major resistance.

Spot
Nifty50 opened gap down 38 points at 22,536, while Bank Nifty opened with a gap down of 40 points at 47,894.
After opening gap down, Nifty50 rallied to its intra-day high of 22,577. As expected, call writers at the 22,500 strike were active, and aggressive call writing was witnessed from the beginning of the day's trading. This resulted in selling pressure, and Nifty50 started trading lower. Some support was seen at the 10 DEMA, but the selling pressure was such that Nifty50 not only breached the 10 DEMA but also the 20 MEMA to hit its intra-day low of 22,329. Buying interest emerged at lower levels, driving Nifty50 to regain both the 20 MEMA and 10 DEMA to close the day at 22,470 with a loss of 27 points. Nifty50 gained nearly 150 points from its intraday low during Wednesday's trade. It was a good closing for Nifty50 as it managed to close above the 10 DEMA at 22,483. India VIX fell to 13.69, which is still within our comfortable zone, also signalling a decrease in market volatility. 20 stocks out of Nifty 50 stocks closed the day in green.

Nifty Bank, after opening gap down, rallied immediately to its intra-day high of 48,222 within the first hour of trading. Selling pressure was witnessed at this level, which pushed Nifty Bank lower to hit its intra-day low of 47,844. The swing low of January 27 at 47,881, is a major support--Nifty Bank rebounded from here to regain lost ground and finally closed the day at 48,056 with a gain of 202 points. It was a good closing for Nifty Bank. 5 out of 12 banking stocks closed in green.

Options chain
Nifty50 (expiry March 13)
Today is the weekly expiry of the Nifty50 contracts. The option chain has changed in favour of call writers. Aggressive call writing was visible at every level from 22,500 till 23,000. Call writers took a firm grip from 22,500 onwards with fresh call writing at every strike. Calls were rolled down from 23,000 and 22,900 to the 22,600 level. The IV on the put side is 13.94 and 14.92 on the call side.

Nifty Bank (expiry March 27)
Not much changed from Tuesday's option chain. The conviction of the put writers at 48,000 did not waver. Some put unwinding was witnessed at 48,000; this was matched by call unwinding at the same level. This option chain was evenly placed.  Implied Volatility for puts was 15.33, while for calls it was 13.82.

Sensex (expiry March 18, 2025)
Aggressive call writing was witnessed from the 74,000 level onwards till 75,000. This was evenly matched by put writing from 74,000 till 73,000.  Implied volatility for puts was 11.54, while for calls it was 10.51.

Support and Resistance
 - Nifty50: Major support at 22,300; major resistance at 22,600
 - Nifty Bank: Major support at 48,000; major resistance at 48,500
 - Sensex: Major support at 74,000; major resistance at 74,500

Put-call ratio; at-the-money
 - Nifty50: Overall 0.9; ATM 0.69 (bearish to neutral)
 - Nifty Bank: Overall 1.0; ATM 1.02 (neutral to bullish)
 - Sensex: Overall 0.8; ATM 0.96 (bearish to neutral)