Weak US Handover, Asian Markets Indicate 5th Straight Loss Day

Gift Nifty was showing a flat-to-slight gap down by 5 points at 6:30 AM. Yesterday, Dow closed higher by 33 points, Nasdaq closed lower by 237 points, and S&P 500 closed the day lower by 30 points. This morning, Asian Markets were trading lower with Nikkei 225 down by 364 points, Kospi down by 26 points, and Hang Seng trading lower by 98 points. Dow futures were trading higher by 54 points, and Nasdaq futures trading higher by 14 points. Taking cues from Gift Nifty, Nifty50 will likely open near yesterday's close of 22553. Yesterday, FIIs sold Rs 6287 crore of stock in the cash market and are now selling at all levels in our markets. Despite the opening gap down on Monday morning, the markets traded within a range of 50 to 75 points during the entire day.

US futures are flat. Although Nasdaq fell more than 1% during yesterday's trade, our markets seem to have preempted the Nasdaq during our trading hours on Monday. Nifty IT Index fell 2.71% during Monday's session. India VIX has gone down to 14.44 and is in the comfortable zone. Today is the expiry of the Sensex monthly contracts. The markets are closed tomorrow for Maha Shivaratri, and Thursday is the monthly expiry of Nifty50 and Nifty Bank. The data suggests a bias towards weakness. All the immediate moving averages are far away, and all supports and resistances will have to be drawn from the conviction of the call and put writers. Put writers have taken a firm grip at 22500 levels, and call writers have a firm grip on 22700 levels. This suggests the Nifty50 will be in this range till its expiry on Thursday. On the lower side, the zone up to 22400 level is now open, which is the swing low of the third week of May 2024. On the upper side, the range can be the crucial zones of 22725–22800; this zone, which has acted as a big support for the last 8 to 9 trading sessions, will be a big resistance. Today, the day appears to belong to option writers. It still remains a sell on rise market.

Nifty Bank recovered from the lows of the day in yesterday's trade and closed the day in the higher range of the day. Nifty Bank will also be preparing for the expiry of Monthly contracts due on Thursday. FIIs are bearish in Nifty Bank, but data suggest that the conviction of the put writers is much more than the call writers. The sentiment in Nifty Bank seems to be neutral to bullish. Expect a short covering rally in Nifty Bank. The support and resistance will have to be inferred from the conviction of the call and put writers, as the shortest moving averages are far away. The range of Nifty Bank seems to be between 48500 to 49000.

Options Chain
Nifty 50 (expiry February 27)
Aggressive call writing was seen at every level from 22600 till 23000, but not for puts at at lower levels. The option chain was lopsided in favour of call writers. The conviction of the put writers appears to be weak. With 9.649 million puts, a strong resistance stands at 22500. Resistance is evident at every level from 22700 onwards. With 13.20 million calls, 22800 is a strong resistance. With 9.08 million calls and 8.478 million puts, the difference is not much. The IV for puts is 10.99 and is 15.96  for calls.

Nifty Bank (expiry February 27)
A lot changed since Friday. Aggressive additions of calls from 48800 till 50000 and aggressive put writing at every level from 48800 downwards was seen today. The option chain was evenly balanced between the call and put writers. With 1.617 million calls, 49000 is the immediate resistance, and with 1.493 million puts, 48500 the support. The IV for puts is 12.97 and is 18.93 for calls.

Support and resistance
 - Nifty50: Major support at 22500; major resistance at 22800.
 - Nifty Bank: Major support at 48500; major resistance at 49000.
 - Sensex: Major support at 74500; major resistance at 75000. 

Put-call ratio and at-the-money
 - Nifty50: Overall 0.60; ATM 0.82 (bearish)
 - Nifty Bank: Overall 0.7; ATM 0.88 (bearish)
 - Sensex: Overall 0.6; ATM 1.0 (neutral to bearish)

Yesterday
Spot
Nifty opened gap down 186 points at 22609 and Bank Nifty opened gap down 362 points at 48619.

After opening gap down, as we had expected in our Tuesday report, Nifty50 in the opening trades did rise by 60 points to its intraday high of 22668, before selling pressure drove Nifty50 downwards towards 22550. A feeble attempt was made during midday to regain some lost ground, but 22600 became a rejection level for Nifty50. For the rest of the day, Nifty50 was in a range of 50 points between 22550 and 22600 to finally close the day at 22553. It was a bad closing for Nifty50 as it closed at the lower range of the day with 22518 being its intraday low. 13 stocks out of Nifty 50 stocks closed the day in green.

Nifty Bank, after opening gap down, made its intraday low of 48281. At about 9:40 AM, buying emerged at this lower level; Nifty Bank started its upward journey to recover more than 450 points in intraday trades to touch its intraday high of 48748 and to finally close the day at 48651. This was a good closing for Nifty Bank as it closed towards the higher range of the day's trading range. 3 of the 12 Nifty Bank stocks closed the day in green.

It was not a good day for the other Sectoral Indices. The notable gainers were Nifty Auto (0.22%), Nifty FMCG (+0.36%), and Nifty Pharma (+0.02%). The notable losers were Nifty Next 50 (-1.18%), Nifty Mid Select (-0.65%), Nifty Midcap100 (-0.94%), Nifty IT (-2.71%), Nifty Metal (-2.17%), Nifty Consumer Durables (-0.29%), Nifty Realty (-0.81%), Nifty CPSE (-1.54%), Nifty PSE (-1.45%), Nifty Oil & Gas (-1.10%), and Nifty Small Cap 100 (-1.02%).