Nifty50 In Consolidation Mode In 23500 - 24000 Range

Today’s Market Setup
FIIs are slightly bearish in options, bullish in stock futures and are neutral in ondex futures. Proprietary desks are neutral in index futures and options. They are slightly bullish in stock options. Retail clients are bullish in index and stock options. The overall set up is neutral.

With the Gift Nifty slightly up by 33 points, the Implied volatility) remaining within the comfortable zone (an indicator that the market's expectation of future volatility is moderate), writers of puts have taken a firm grip at 23500 and 23600 levels--this will restrict the downward movement of Nifty50. Call writers have taken a very strong grip from 23700 levels onwards till 24000, which also restricts the upward movement of Nifty50.

Expect a consolidation at these levels with the range being 23500, which is also close to the level of 200 - Double Exponential Moving Average placed at 23611. This will also act as a very strong support at 23600. Nifty might be a sellers' market today. The momentum is missing from the markets and a wait-and-watch policy should be observed until Friday when the RBI announces its decision on interest rates , and we see the reaction of the US markets after the release of the US initial jobless claims data.

Bank Nifty will find support at the 200 DEMA, placed at 50210. Bank Nifty is better placed and should also take a pause in anticipation of the RBI's decision on interest rates, which are to be announced on Friday. Even so, Bank Nifty is a buy-on-dips market; a dip towards 200 DEMA might see good buying with today's high as the target to book profits. 

Yesterday

Spot
Nifty50 opened gap up by 62 points and Bank Nifty opened gap up--the index opened higher than the previous day's closing price--by 245 points, respectively. As we had expected in yesterday's report, Nifty 50 opened at the level of strong resistance of 23795, and fell from day's high of 23807. Nifty50 traded the day in a range of 120 points, with 23807 being the highest of the day and 23680 being the lowest of the day. It was a writers’ day-favourable for option sellers -and options premiums have fell throughout the day. 

Bank Nifty performed better than Nifty 50. It took a dip to 50215, from where it took support from 50 and 200 DEMA to climb to 50500 levels, before some profit booking towards the end of the day dragged it down to close the day at 50252. Eight out of 12 banking stocks ended higher than their opening prices.

Today was a mixed bag for the Nifty indices. Notable gainer indices were Nifty Next 50 (0.65%), Nifty IT (+0.68%), Nifty Metal (+1.53%), Nifty Pharma (+0.62%), Nifty PSE (+1.5%) and Nifty CPSE (+1.30%). Notable losers were Nifty FMCG (-1.56%) and Nifty Consumer Durables (-1.03%). Of the  Nifty50 stocks, 24 closed up.

F&O
After Monday’s bull run on the markets, the markets chose to take a breather and to consolidate. The derivatives also suggest that this should continue tomorrow for the expiry of Nifty50 Weekly contracts. Expect a range-bound expiry tomorrow.

Thursday night at our time, Our markets will initially react tomorrow to the US initial jobless claims data expected tonight, and later to RBI’s decision. 

Options Chain: (Nifty50 Expiry February 6)
Nifty50: Today is the weekly expiry of Nifty50 contracts. Placement of the option chain dated 6th Feb 2025, with 8 million puts at 23600 level will act as substantial support. Big support is at 23500 level with 12.65 million puts. Similarly, with 12.9 million calls at 23700, it is a big resistance and is followed by a similar number of calls at every level up to 24000.

It is very clear from the Bar Chart that Nifty50 has a very restricted upside movement and any movement will be on the lower side. This lower movement will also be restricted to 23500. Expect Nifty50 to trade between 23500 to 23700 for today’s expiry. The IV at the put side is at 16.98 and at 11.74 on the call side.

Bank Nifty: (Expiry February 27 ): Put writers have rolled up the puts from 49500 to 50500, closing positions at lower strike prices and opening new positions at higher strike prices. Some call unwinding is seen at every level from 49800 up to 50200.  as they close existing positions. Addition of calls at 50500 makes this an immediate resistance with 50000 as a strong base.

Support and Resistance

• Nifty50: Major support is at 23500 and major resistance is at 23700.
• Bank Nifty: Major support is at 49500 and major resistance is at 51000.
• Sensex: Major support is at 78000 and major resistance is at 78500.

Put-call Ratio and At-the-money

PCR:

• Nifty: Overall 0.9 and at ATM 0.70 (Bearish)
• Bank Nifty: Overall 0.90 and at ATM 0.90 (Neutral)
• Sensex: Overall 0.80 and at ATM 0.67 (Bearish)