Though experts suggest the Nifty may have bottomed out near 10,040, investors must tread with caution ahead of the US Fed policy outcome.
The Nifty started on a positive note Wednesday but failed to keep the momentum going. The index closed below its crucial 200-day exponential moving average (DEMA) for the second day in a row. It formed a small-bodied candle which closely resembles a ‘Spinning Top’ kind of indecisive pattern.
Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.
The Nifty index opened gap up and negated its formation of lower highs – lower lows of the last four trading session. It came under selling pressure in afternoon trade and pulled the index below 200-DEMA placed around 10165, and 5-DEMA which was placed at 10,185.
Investors are advised to tread with caution ahead of the US Federal Reserve policy meeting. But, technically, there is a higher possibility the market has bottomed out near 10,040, suggest experts.
“The Nifty50 registered a Spinning Top kind of indecisive formation as it faced selling pressure after retracing 38.2% of its last leg of fall from the highs of 10478 levels. However, this intraday selling can be attributed to the nervousness ahead of the major global event in the for form Fed meeting,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“As more or less market appears to have factored in the outcome of the event it should ideally stabilisie and rally unless there are going to be some nasty surprises from the Fed which are beyond the anticipation of the market,” he said.
Mohammad further added there is a higher possibility of a bottom around 10040 levels and hence, post Fed outcome if the market stabilises then the rally should get extend up to the levels of 10380. “Contrary to this a decisive breach of 10130 levels on intraday basis may again drag down the indices towards critical support zone of 10040 – 9980 levels,” he said.
India VIX fell down by 3.22 percent at 15.10. A decline in volatility from the last two trading sessions is providing some comfort to the Bulls but needs to fall below 13.50-13 to process for a short-term reversal after the recent decline of around 1100 points.
We have collated the top 15 data points to help you spot profitable trades:
Key support and resistance level for Nifty
The Nifty closed at 10,155.2 on Wednesday. According to Pivot charts, the key support level is placed at 10,116.37, followed by 10,077.53. If the index starts moving upwards, key resistance levels to watch out are 10,210.67 and 10,266.13.
Nifty Bank
The Nifty Bank index closed at 24,255.6 on Wednesday. The important Pivot level, which will act as crucial support for the index, is placed at 24,156.27, followed by 24,056.93. On the upside, key resistance levels are placed at 24,407.37, followed by 24,559.13.
Call Options data
In terms of open interest, the 10,500 call option has seen the most call writing so far at 61.40 lakh contracts. This could act as a crucial resistance level for the index in the March series.
The second-highest buildup has taken place in the 10,400 Call option, which has seen 44.85 lakh contracts getting written so far. The 10,300 Call option has accumulated 44.22 lakh contracts.
During the session, Call writing was most seen at the strike price of 10,300, which saw an addition of 1.52 lakh contracts.
Call unwinding seen was seen at the strike price of 10,100, which shed 6.23 lakh contracts, followed by 10,400, which shed 3.81 lakh contracts and 10,700, which shed 3.78 lakh contracts.
Put Options data
Maximum open interest in put options was seen at a strike price of 10,000, in which 66.12 lakh contracts been added till date. This will act as a crucial base for the index in the March series.
The 10,100 put option comes next, having added 44.01 lakh contracts so far, and the 10,200 put option, which has now accumulated 36.83 lakh contracts.
During the session, put writing was seen the most at a strike price of 10,200, with 8.98 lakh contracts being added, followed by 9,800, which added 1.38 lakh contracts.
Put unwinding was seen at a strike price of 9,900, in which 3.06 lakh contracts were shed, followed by 10,400, in which 2.84 lakh contracts were shed. The 10,100 put option saw 2.07 lakh contracts getting shed.
FII & DII data:
Foreign institutional investors (FIIs) bought shares worth Rs 98.44 crore, while domestic institutional investors purchased shares worth Rs 197.78 crore in the Indian equity market, as per provisional data available on the NSE.
