Trade Setup for Budget Day: The Indian stock market continued its bullish streak for the fourth consecutive session on January 31, registering over a 1% gain. Investors showed strong optimism ahead of the Union Budget, scheduled to be presented on February 1. The Nifty 50 index started the February series on a strong note, breaking through key resistance levels with above-average volumes. As the market gears up for Budget Day trading, let’s take a deep dive into the 15 key factors that could influence your trading decisions.
1) Key Levels for the Nifty 50 (23,508)
- Resistance Levels: 23,547, 23,611, 23,714
- Support Levels: 23,341, 23,278, 23,175
- Technical Indicators: Nifty formed a long bullish candlestick on the daily chart, breaking the lower high pattern of January 21, signaling bullish momentum. RSI (52.17) indicates a positive bias, and MACD also shows a bullish crossover. The index closed above the 50-week EMA, reinforcing market strength.
2) Key Levels for the Bank Nifty (49,587)
- Resistance Levels: 49,677, 49,829, 50,074
- Support Levels: 49,186, 49,034, 48,788
- Fibonacci Resistance: 50,381, 51,158
- Fibonacci Support: 47,875, 46,078
- Technical Indicators: Bank Nifty formed a strong bullish candlestick, maintaining its higher low formation. The index surged 2.52% on a weekly basis, forming a large bullish candle. Sustaining above short-term moving averages, the sentiment remains positive.
3) Nifty Call Options Data
- Key Resistance: 24,000 strike holds maximum Call open interest (77.11 lakh contracts), followed by 23,500 and 24,500.
- Significant Call Writing: 24,000 strike saw an addition of 44.65 lakh contracts.
- Key Call Unwinding: 23,200 strike saw the highest Call unwinding of 1.69 lakh contracts.
4) Nifty Put Options Data
- Key Support: 23,000 strike holds maximum Put open interest (56.53 lakh contracts), followed by 23,500 and 23,400.
- Significant Put Writing: 23,500 strike added 43.05 lakh contracts.
5) Bank Nifty Call Options Data
- Key Resistance: 50,000 strike holds the highest open interest (7.15 lakh contracts), followed by 51,000 and 49,000.
- Maximum Call Writing: Seen at 50,000 strike (1.15 lakh contracts added).
6) Bank Nifty Put Options Data
- Key Support: 49,000 strike holds the highest open interest (10.05 lakh contracts), followed by 48,000 and 50,000.
- Significant Put Writing: 48,000 strike added 1.52 lakh contracts.
7) Funds Flow (Rs crore)
- FII Activity: Foreign Institutional Investors were net buyers in the market.
- DII Activity: Domestic Institutional Investors also showed buying interest.
8) Put-Call Ratio (PCR)
- PCR rose to 1.01, indicating a bullish sentiment in the market.
- A rising PCR above 1 signals stronger Put buying, suggesting positive market sentiment.
9) India VIX (Volatility Index)
- India VIX dropped 6.57% to 16.25, indicating lower market volatility.
- Lower volatility generally supports bullish momentum, but caution is advised near Budget announcements.
10) Long Build-Up (78 Stocks)
- Stocks showing increased open interest along with price appreciation indicate long build-up.
11) Long Unwinding (14 Stocks)
- Stocks witnessing a fall in both price and open interest suggest unwinding of long positions.
12) Short Build-Up (25 Stocks)
- Stocks showing a rise in open interest but a fall in price indicate short build-up.
13) Short Covering (110 Stocks)
- Stocks experiencing a decrease in open interest and a rise in price indicate short-covering activity.
14) High Delivery Trades
- Stocks witnessing high delivery percentage indicate strong investor interest rather than speculative trading.
15) Stocks Under F&O Ban
- Stocks Added: None
- Stocks Retained: None
- Stocks Removed: None
Conclusion
As the Union Budget unfolds, market participants should remain cautious and track key resistance and support levels. The bullish sentiment, supported by technical indicators and options data, suggests a continuation of the rally unless a sharp trend reversal occurs. Stay updated with real-time market movements, and trade wisely with a risk-managed approach.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.