February 21, 2024

Nifty may remain in 21,000-21,500 range in coming days

The market is expected to be rangebound in the last week of the current calendar year with Nifty 50 facing resistance in the zone of 21,500-21,600, and taking immediate support at 21,300-21,200 levels. Clearance of 21,600 decisively can take the index towards 21,800 levels, while the breaking of the said support can drag it towards 21,000 levels, experts said.

On December 22, the benchmark indices extended gains for second consecutive session after sharp fall in middle of the week. The BSE Sensex rallied 242 points to 71,107, while the Nifty 50 jumped 94 points to 21,349 and formed bullish candlestick pattern on the daily charts with slightly better volumes than previous day. The higher high, higher low formation was also seen.

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“On the daily chart, the Nifty has retraced a good portion of the losses seen on Wednesday. Nifty would need to cross the recent highs of 21,593 to reverse the current downtrend. Crucial supports to watch for re-emergence of weakness are at 21,232,” Subash Gangadharan, senior technical and derivative analyst, HDFC Securities said.

Kunal Shah, senior technical & derivative analyst at LKP Securities also feels the lower-end support for the index is positioned at 21,200, presenting a buying opportunity on any dips toward this level. “Sustaining above 21,300 could pave the way for further upside momentum, targeting the 21,500 levels.”

The broader markets also traded higher with the Nifty Midcap 100 and Smallcap 100 indices rising 0.7 percent and 1 percent respectively.

The market was shut on December 25 for Christmas holiday.

We have collated 15 data points to help you spot profitable trades:

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Key support and resistance levels on the Nifty

The pivot point calculator indicates that the Nifty is likely to see immediate resistance at 21,385, followed by 21,422 and 21,482 levels, while on the lower side, it can take support at 21,264, followed by 21,226 and 21,166 levels.

Nifty Bank

On December 22, the Bank Nifty underperformed and lost most of previous day’s gains. The index shed 348 points to 47,492 and formed bearish candlestick pattern on the daily charts, but held its previous day’s low.

Overall, “the index has been consolidating in a wider range in between 47,000 to 48,200 levels from the past six sessions as banking stocks continued to underperform,” Chandan Taparia, senior vice president and analyst – derivatives at Motilal Oswal Financial Services said.

Now, the index has to cross and hold above 47,500 levels to make an up move towards 48,000, then 48,219 levels, while a hold below the same could see weakness towards 47,250 then 47,000 levels, he added.

As per the pivot point calculator, the Bank Nifty is expected to see resistance at 47,910 followed by 48,065 and 48,315 levels, while on the lower side, it may take support at 47,409 followed by 47,255 and 47,004 levels.

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Call options data

As per the monthly options data, the maximum Call open interest remained at 22,000 strike, with 1.09 crore contracts, which can act as a key resistance level for the Nifty in the short term. It was followed by the 21,500 strike, which had 76.69 lakh contracts, while the 21,600 strike had 53.53 lakh contracts.

Meaningful Call writing was at the 22,500 strike, which added 20.44 lakh contracts followed by 22,000 and 21,800 strikes, which added 17.86 lakh and 16.39 lakh contracts.

The maximum Call unwinding was at the 21,200 strike, which shed 3.53 lakh contracts followed by 21,000 and 21,100 strikes, which shed 2.69 lakh and 1.19 lakh contracts.

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Put option data

On the Put front, the 21,000 strike continued to own the maximum open interest, which can act as a key support area for the Nifty with 94.64 lakh contracts. It was followed by 21,200 strike comprising 59.23 lakh contracts and 20,800 strike with 57.71 lakh contracts.

Meaningful Put writing was at 21,300 strike, which added 24.26 lakh contracts followed by 21,200 strike and 21,400 strike, which added 21.53 lakh contracts and 21.11 lakh contracts.

Put unwinding was at 21,800 strike, which shed 11,800 contracts followed by 22,200 strike, which shed 250 contracts.

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Stocks with high delivery percentage

A high delivery percentage suggests that investors are showing interest in the stock. Trent, Dabur India, Godrej Consumer Products, Shriram Finance, and Atul saw the highest delivery among the F&O stocks.

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50 stocks see a long build-up

A long build-up was seen in 50 stocks, which included National Aluminium Company, Sun TV Network, Piramal Enterprises, Birlasoft, and Hero MotoCorp. An increase in open interest (OI) and price indicates a build-up of long positions.

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38 stocks see long unwinding

Based on the OI percentage, 38 stocks saw long unwinding, including Apollo Tyres, RBL Bank, M&M Financial Services, PI Industries, and Federal Bank. A decline in OI and price indicates long unwinding.

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23 stocks see a short build-up

A short build-up was seen in 23 stocks, which were Marico, Ipca Laboratories, MCX India, Siemens India, and Info Edge India. An increase in OI along with a fall in price points to a build-up of short positions.

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75 stock see short-covering

Based on the OI percentage, 75 stocks were on the short-covering list. This included Hindustan Copper, Tata Chemicals, Astral, IDFC First Bank, and Abbott India. A decrease in OI along with a price increase is an indication of short-covering.

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PCR

The Nifty Put Call ratio (PCR), which indicates the mood of the equity market, climbed to 1.18 on December 22, from 1.11 levels in the previous session. The above 1 PCR indicates that the traders are buying more Puts options than Calls, which generally indicates an increase in bearish sentiment.

Bulk deals

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Stocks in the news

Infosys: The global company has elected to terminate the Memorandum of Understanding with Infosys and the parties will not be pursuing the Master Agreement. Infosys was supposed to provide enhanced digital experiences, along with modernisation and business operations services, leveraging Infosys platforms and AI solutions. The total client target spend over 15 years was estimated at $1.5 billion.

UPL: The agrochemical company said the Board of Directors has approved the fund raising up to Rs 4,200 crore through issue of equity shares on rights issue basis to the eligible equity shareholders.

Tata Steel: The Tata Group firm said the shareholders will be meeting on January 25, 2024 to consider the scheme of amalgamation amongst Tata Steel and The Indian Steel & Wire Products.

Biocon: Subsidiary Biocon Biologics signed a distribution agreement with Sandoz, granting the company the exclusive rights to promote, sell and distribute Adalimumab BS for subcutaneous injection in Japan. Subsidiary has acquired the global biosimilars portfolio of Viatris including Adalimumab.

Zydus Lifesciences: The US Food and Drug Administration (USFDA) has concluded an inspection at the company’s API site at Changodar, Ahmedabad, with 6 observations. This PAI-cum-GMP USFDA inspection was conducted during December 14-22. There were no data integrity related observations, and no repeat observations from the previous inspection.

KPIT Technologies: The company has acquired 13 percent shareholding in N-Dream after primary investment of 2.7 million euro and secondary investment of 0.3 million euro. N-Dream AG is a cloud based game aggregation platform company, based in Switzerland. The company has an option to increase the shareholding in N-Dream further.

Funds Flow (Rs crore)

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FII and DII data

Foreign institutional investors (FIIs) net sold shares worth Rs 2,828.94 crore, while domestic institutional investors (DIIs) bought Rs 2,166.72 crore worth of stocks on December 22, provisional data from the National Stock Exchange (NSE) showed.

Stock under F&O ban on NSE

The NSE has added National Aluminium Company to its F&O ban list for December 26, while retaining Ashok Leyland, Balrampur Chini Mills, Delta Corp, Hindustan Copper, India Cements, and SAIL in the list. Manappuram Finance, and RBL Bank were removed from the list.

Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.

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