February 21, 2024

Nifty likely to face strong resistance at 21,500-21,600

The market is expected to remain rangebound with a positive bias with the Nifty 50 facing hurdle at 21,500-21,600 on the higher side, and taking support at 21,200-21,000 levels in coming sessions, while the volume is expected to be low given the holiday period, experts said.

The benchmark indices continued their upward momentum for three days in a row. On December 26, the BSE Sensex climbed 230 points to 71,337, while the Nifty 50 was up 92 points at 21,441 and formed a bullish candlestick pattern on the daily charts with higher highs and higher low formation for yet another session.

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Overall, the Nifty has now retraced a good portion of the significant losses seen last Wednesday (December 20). “The 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 21,329-21,232,” Subash Gangadharan, senior technical and derivative analyst at HDFC Securities said.

Rajesh Bhosale, technical analyst at Angel One also feels the upcoming sessions around the 21,550 – 21,600 range are critical, representing a formidable resistance formed by the reciprocal retracement of the October decline.

“As we approach the close across various time-frames, the prevailing sentiment is optimistic,” he said, adding, however, considering the smaller size of the recent candles compared to the significant bearish one from last Wednesday, some caution is advised.

The next few sessions could be crucial, especially with the year-end approaching, and it might be prudent for investors to secure timely profits before the start of the new calendar year, he advised.

The India VIX, known as the fear indicator, rose 7.08 percent to 14.68, giving some discomfort to the bulls.

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

Key support and resistance levels on the Nifty

The pivot point calculator indicates that the Nifty is likely to see immediate resistance at 21,455, followed by 21,507 and 21,564 levels, while on the lower side, it can take support at 21,360, followed by 21,325 and 21,268 levels.

Nifty Bank

On December 26, the Bank Nifty also supported the market, rising 233 points to 47,725 after a day of correction, and formed a bullish candlestick pattern with sizeable upper & lower shadows on the daily charts.

“Put writers aggressively built positions at the 47,500 strike in Bank Nifty. This level will act as a key support for the index,” Ashwin Ramani, derivatives & technical analyst, SAMCO Securities said.

Bank Nifty failed to sustain above the 48,000 level in the last six trading sessions. A strong close above 48,000, can lead to momentum picking up in Bank Nifty, he feels.

As per the pivot point calculator, the Bank Nifty is expected to see resistance at 47,764 followed by 47,922 and 48,085 levels, while on the lower side, it may take support at 47,495 followed by 47,394 and 47,232 levels.

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Call options data

As per the monthly options data, the 22,000 strike owned the maximum Call open interest, with 1.25 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 94.9 lakh contracts, while the 21,600 strike had 74.36 lakh contracts.

Meaningful Call writing was at the 21,900 strike, which added 23.44 lakh contracts followed by 22,100 and 21,600 strikes, which added 21.6 lakh and 20.83 lakh contracts.

The maximum Call unwinding was at the 21,300 strike, which shed 7.47 lakh contracts followed by 21,200 and 21,000 strikes, which shed 4.21 lakh and 2.33 lakh contracts.

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Put option data

On the Put front, the 21,300 strike reported the maximum open interest, which can act as a key support area for the Nifty with 97.90 lakh contracts. It was followed by 21,000 strike comprising 91.02 lakh contracts and 21,400 strike with 78.77 lakh contracts.

Meaningful Put writing was at 21,300 strike, which added 43.49 lakh contracts followed by 20,700 strike and 21,400 strike, which added 41.58 lakh contracts and 40.92 lakh contracts, respectively.

Put unwinding was at 20,200 strike, which shed 10.27 lakh contracts, followed by 21,000 strike and at 20,100 strike, which shed 3.62 lakh contracts and 3.05 lakh contracts, respectively.Image926122023

Stocks with high delivery percentage

A high delivery percentage suggests that investors are showing interest in the stock. Max Financial Services, Dabur India, Hindustan Unilever, Sun Pharmaceutical Industries and UltraTech Cement saw the highest delivery among the F&O stocks.

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58 stocks see a long build-up

A long build-up was seen in 58 stocks, which included Tata Communications, Tata Chemicals, Atul, M&M Financial Services and Hero MotoCorp. An increase in open interest (OI) and price indicates a build-up of long positions.

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33 stocks see long unwinding

Based on the OI percentage, 33 stocks saw long unwinding, including National Aluminium Company, MCX India, Bata India, Sun TV Network and Manappuram Finance. A decline in OI and price indicates long unwinding.

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25 stocks see a short build-up

A short build-up was seen in 25 stocks, which were RBL Bank, Cholamandalam Investment & Finance, Abbott India, HDFC Life Insurance Company and Muthoot Finance. An increase in OI along with a fall in price points to a build-up of short positions.

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71 stocks see short-covering

Based on the OI percentage, 71 stocks were on the short-covering list. This included Indiabulls Housing Finance, Hindustan Copper, IndiaMART InterMESH, Dr Lal PathLabs and Indraprastha Gas. 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 further to 1.23 on December 26, from 1.18 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 dealsImage226122023

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Stocks in the news

Kansai Nerolac Paints: The paint manufacturing company said the Board of Directors has approved a proposal for entering into an agreement for sale with Aethon Developers, the subsidiary of Runwal Developers, for the sale of its land parcel at Lower Parel, Mumbai, for Rs 726 crore. Accordingly, the company has entered into an Agreement for Sale with Aethon.

Aditya Birla Capital (ABCL): The company has made investments of Rs 850 crore on a rights basis, in Aditya Birla Finance (ABFL) and Rs 50 crore in Aditya Birla Capital Digital (ABCDL). Post the said investments, there is no change in the percentage shareholding of ABCL and both, ABCDL and ABFL continue to be wholly owned subsidiaries of the company.

Credo Brands Marketing: The Mufti Menswear is set to debut on the bourses on December 27. The final issue price has been fixed at Rs 280 per share.

RBZ Jewellers: The Ahmedabad-based jewellery retailer will list its equity shares on December 27. The issue price has been set at Rs 100 per share.

Happy Forgings: The forgings and high-precision machined components maker will be listed on the BSE and NSE on December 27. The final issue price is Rs 850 per share.

Zydus Lifesciences: Subsidiary Zydus Healthcare has received an intimation from the Income Tax Department, determining income tax demand of Rs 284.58 crore for the assessment year 2023-2024, while processing the return of income of Zydus Healthcare. The company strongly believes that once the rectification will be made, the entire demand will be deleted.

Vishnu Prakash R Punglia: The company has received a Letter of Award from the Government of Uttarakhand for two projects worth Rs 899 crore. Vishnu Prakash will develop a water supply system with 18 years of operation and maintenance (O&M), in Haldwani and Kotdwar, Uttarakhand.

Funds Flow (Rs crore)Image126122023

FII and DII data

Foreign institutional investors (FIIs) net sold shares worth Rs 95.20 crore, while domestic institutional investors (DIIs) bought Rs 167.04 crore worth of stocks on December 26, provisional data from the National Stock Exchange (NSE) showed.

Stock under F&O ban on NSE

The NSE has added RBL Bank to its F&O ban list for December 27, while retaining Balrampur Chini Mills, Delta Corp, Hindustan Copper, and National Aluminium Company on the list. Ashok Leyland, India Cements, and SAIL 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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