Trade Setup for February 6: Top 15 Things to Know Before the Opening Bell
Trade Setup for February 6: The Indian stock market saw a slightly volatile trading session on February 5, with the Nifty 50 index surpassing the falling resistance trendline by briefly climbing above 23,800 before succumbing to profit booking. As a result, it closed 43 points lower, signaling a temporary pause after the previous day’s sharp rally. However, the sentiment remains bullish, with the overall formation of higher tops and higher bottoms. Experts suggest buying on dips, with hopes that the index could rally toward the 24,000-24,200 range if it decisively moves above 23,800. If the index falls below this level, consolidation can be expected, with support at 23,500.
Here’s a breakdown of the key levels and data points to keep an eye on for a profitable trading day:
1) Key Levels For Nifty 50 (23,696)
Resistance: 23,776 | 23,806 | 23,855
Support: 23,680 | 23,650 | 23,601
The Nifty 50 recently formed a bearish candlestick pattern on the daily charts, yet the bullish trend remains intact. The index is trading above both the 50-day and 200-day exponential moving averages (EMAs), which is a positive sign. The Relative Strength Index (RSI) stands at 55.85, indicating a positive momentum, while the MACD is inching closer to the zero line, supporting an optimistic outlook.
2) Key Levels For Bank Nifty (50,343)
Resistance: 50,477 | 50,550 | 50,667
Support: 50,243 | 50,171 | 50,054
The Bank Nifty outperformed the Nifty 50, rising by 185 points. Despite forming a small bearish candle with volatility indications, the higher tops and higher bottoms formation continued. The index closed above the 50-day and 200-day EMAs, and momentum indicators point to further bullishness.
3) Nifty Call Options Data
- Maximum Call Open Interest: 24,000 strike (1.62 crore contracts)
- Maximum Call Writing: 23,700 strike (70.77 lakh contracts)
- Call Unwinding: 23,500 strike (-6.38 lakh contracts)
4) Nifty Put Options Data
- Maximum Put Open Interest: 23,000 strike (1.25 crore contracts)
- Maximum Put Writing: 23,750 strike (22.41 lakh contracts)
- Put Unwinding: 23,400 strike (-12.63 lakh contracts)
5) Bank Nifty Call Options Data
- Maximum Call Open Interest: 52,000 strike (16.65 lakh contracts)
- Maximum Call Writing: 52,000 strike (1.98 lakh contracts)
- Call Unwinding: 50,000 strike (-2.05 lakh contracts)
6) Bank Nifty Put Options Data
- Maximum Put Open Interest: 49,000 strike (13.59 lakh contracts)
- Maximum Put Writing: 48,500 strike (1.82 lakh contracts)
- Put Unwinding: 49,600 strike (-12,360 contracts)
7) Funds Flow (Rs Crore)
Stay updated with the latest fund flow data to gauge the market sentiment and decide your trade strategy accordingly.
8) Put-Call Ratio (PCR)
The Nifty PCR dropped to 0.97 from 1.16 on February 5, indicating a shift towards a bearish sentiment. If the ratio falls below 0.7, it will confirm a shift to more selling in Calls, reflecting a bearish mood in the market.
9) India VIX (Fear Index)
The India VIX increased slightly by 0.46% to 14.08, but it remains below all key moving averages, which is still favorable for bulls.
10) Long Build-up (75 Stocks)
A significant increase in open interest and price was observed in 75 stocks, indicating the formation of long positions.
11) Long Unwinding (21 Stocks)
21 stocks saw a decline in open interest and price, signaling the unwinding of long positions.
12) Short Build-up (49 Stocks)
49 stocks witnessed an increase in open interest and a decrease in price, indicating a build-up of short positions.
13) Short-Covering (85 Stocks)
85 stocks saw short-covering with a decrease in open interest and a price increase, pointing towards a reversal of short positions.
14) High Delivery Trades
High delivery trades indicate a long-term investment interest in specific stocks rather than short-term speculation. Keep an eye on stocks with high delivery volume for potential investment opportunities.
15) Stocks Under F&O Ban
Currently, no stocks are under the F&O ban, which means no immediate restrictions on derivative trading.
Financial Ratios for Nifty 50 and Bank Nifty:
| Index | Key Resistance Levels | Key Support Levels | RSI | MACD | EMA Status |
|---|---|---|---|---|---|
| Nifty 50 | 23,776, 23,806, 23,855 | 23,680, 23,650, 23,601 | 55.85 | Bullish | Above 50 & 200-day |
| Bank Nifty | 50,477, 50,550, 50,667 | 50,243, 50,171, 50,054 | Bullish | Bullish | Above 50 & 200-day |
In conclusion, as the Nifty 50 consolidates around the 23,800 level, traders should be prepared for a potential rally toward the 24,000-24,200 zone if the index maintains its upward trajectory. The Bank Nifty continues to outperform, and with strong support levels, both indices provide promising opportunities for the bulls in the short term. As always, stay updated with the latest data points and adjust your trading strategy accordingly.
Stay informed, and happy trading!
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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.