Trade Setup for January 25: Top 15 Things to Know Before the Opening Bell
Trade Setup: The Nifty 50 continued its upward momentum amidst range-bound trading, gaining 0.2 percent on January 23rd. However, it has been consistently moving within the range of 23,000-23,400 since last week. The prevailing sentiment remains bearish, as indicated by the pattern of lower tops and lower bottoms on the daily charts, with the index trading below all significant moving averages. This suggests that consolidation may persist until the index manages to close above the 23,400 mark, with support expected at 23,000. Experts warn that a breach of this support level could potentially push the index down towards the 22,800 level.
To assist you in identifying profitable trading opportunities, we have compiled 15 key data points:
1) Key Levels For The Nifty 50 (23,205)
Resistance levels based on pivot points: 23,258, 23,300, and 23,369
Support levels based on pivot points: 23,120, 23,078, and 23,009
Special Formation: The Nifty 50 has formed a bullish candlestick pattern with a minor upper shadow on the daily charts, while still maintaining the downward-sloping support trendline. However, it remains below all major moving averages (10, 20, 50, 100, and 200-day EMAs), with momentum indicators showing a negative bias, indicating a weak market sentiment.
2) Key Levels For The Bank Nifty (48,589)
Resistance levels based on pivot points: 48,811, 48,905, and 49,058
Support levels based on pivot points: 48,506, 48,411, and 48,259
Resistance levels based on Fibonacci retracement: 49,453, 50,406
Support levels based on Fibonacci retracement: 47,878, 46,078
Special Formation: The Bank Nifty has underperformed compared
3) Nifty Call Options Analysis
Based on the latest monthly options data, the 24,000 strike has the highest Call open interest, with 90.58 lakh contracts. This level is likely to serve as a significant resistance for the Nifty in the near term. Following closely behind are the 23,800 strike with 54.01 lakh contracts and the 23,500 strike with 52.7 lakh contracts.
The most significant Call writing activity was observed at the 24,000 strike, where an additional 16.88 lakh contracts were added. This was followed by the 23,800 and 23,600 strikes, which saw an increase of 14.02 lakh and 11.08 lakh contracts, respectively. Conversely, the most substantial Call unwinding occurred at the 23,100 strike, which saw a decrease of 2.51 lakh contracts, followed by the 23,000 and 22,500 strikes, which saw a decrease of 1.79 lakh and 30,775 contracts, respectively.
4) Nifty Put Options Analysis
Turning to the Put side, the highest Put open interest was observed at the 23,000 strike, with 67.96 lakh contracts, indicating a crucial support level for the Nifty. This was followed by the 22,500 strike with 51.37 lakh contracts and the 23,200 strike with 40.41 lakh contracts.
The most significant Put writing activity took place at the 23,000 strike, where an additional 13.45 lakh contracts were added. This was followed by the 23,200 and 22,300 strikes, which saw an increase of 13.36 lakh and 11.38 lakh contracts, respectively. On the other hand, the most substantial Put unwinding was observed at the 24,000 strike, which saw a decrease of 40,550 contracts, followed by the 24,250 and 23,
5) Bank Nifty Call Options Analysis
Based on the monthly options data, the 49,500 strike has the highest Call open interest, with 25.88 lakh contracts. This level could serve as a significant resistance point for the index in the near term. Following closely behind are the 50,000 strike (23.77 lakh contracts) and the 49,000 strike (16.81 lakh contracts).
The most significant Call writing activity was observed at the 49,500 strike, with an addition of 10.78 lakh contracts. This was followed by the 48,700 strike (2.82 lakh contracts) and the 50,500 strike (1.85 lakh contracts). Conversely, the most substantial Call unwinding occurred at the 47,000 strike, which saw a reduction of 44,430 contracts, followed by the 48,000 and 47,500 strikes, which decreased by 21,930 and 3,075 contracts, respectively.
6) Bank Nifty Put Options Analysis
Turning to the Put side, the highest Put open interest was recorded at the 47,500 strike, with 17.54 lakh contracts. This level could serve as a crucial support level for the index. Following this were the 47,000 strike (15.36 lakh contracts) and the 48,000 strike (14.33 lakh contracts).
The most significant Put writing activity was seen at the 47,500 strike, with an addition of 10.36 lakh contracts. This was followed by the 48,700 strike (1.54 lakh contracts) and the 47,000 strike (74,235 contracts). On the other hand, the most substantial Put unwinding was observed at the 48,800 strike, which saw a reduction of 25,425 contracts, followed by the 48,400 and 48,100 strikes, which decreased by 23,790 and 18,450 contracts, respectively
8) Put-Call Ratio
The Nifty Put-Call ratio (PCR), which reflects market sentiment, increased to 0.95 on January 23, up from the previous session’s level of 0.88.
A rising PCR, above 0.7 or exceeding 1, indicates that traders are selling more Put options than Call options, suggesting a bullish sentiment in the market. Conversely, if the ratio falls below 0.7 or approaches 0.5, it signifies more selling in Calls than Puts, reflecting a bearish mood.
9) India VIX
The India VIX, a volatility index that predicts market volatility, continued its downward trend, dropping by 0.46 percent to 16.70. Despite the decrease, it remains at a higher level, urging caution for bullish investors.
10) Long Build-up (89 Stocks)
Long positions were built up in 89 stocks, as evidenced by an increase in open interest (OI) and price.
11) Long Unwinding (15 Stocks)
Conversely, 15 stocks experienced long unwinding, with a decrease in open interest (OI) and price.
12) Short Build-up (31 Stocks)
In 31 stocks, a build-up of short positions was observed, indicated by an increase in OI alongside a price decline.
13) Short-Covering (92 Stocks)
Short-covering was observed in 92 stocks, characterized by a decrease in OI and a price increase.
14) High Delivery Trades
Stocks with a high percentage of delivery trades indicate investor interest rather than short-term trading.
15) Stocks Under F&O Ban
Securities banned under the F&O segment are those where derivative contracts exceed 95 percent of the market-wide position limit.
Stocks added to F&O ban: Nil
Stocks retained in F&O ban: Aditya Birla Fashion & Retail, Bandhan Bank, Can Fin Homes, Dixon Technologies
Stocks removed from the F&O ban: RBL Bank
Please note that the opinions and investment advice provided by experts on Moneycontrol are their own and do not necessarily reflect those of the website or its management. Moneycontrol recommends that users consult with certified experts before making any investment decisions.
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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.