Nifty 50 (22,929) and Nifty Financial institution (49,099) depreciated 2.7 per cent and a couple of.1 per cent respectively. The futures and choices (F&O) knowledge of each indices present bearish indications.
Nifty 50
Nifty futures (February) (22,972) misplaced 2.7 per cent final week. Because the contract dropped, the cumulative Open Curiosity (OI) of Nifty futures went up by 8 per cent to 194 lakh contracts on Friday. This reveals contemporary brief build-up.
The bearishness is strengthened by the Put Name Ratio (PCR) of choices. For weekly and month-to-month expiry, the ratio stood at 0.6 and 0.8 respectively on Friday. Since contributors have offered extra calls in comparison with places, PCR is lower than 1. Merchants promote calls when their expectation is bearish.
Whereas the F&O numbers present a transparent bearish tilt, the chart of Nifty futures present that the assist at 22,940 stays legitimate. If the contract breaches this degree, it will probably decline to 22,800 after which probably to 22,400.
In case Nifty futures get well from the present degree, it will probably face resistance at 23,250 and 23,400. That stated, for the outlook to develop into optimistic, the contract ought to surpass 23,600. Resistance above this degree is at 23,840.
Technique: Keep out. Brief Nifty futures if it slips beneath the assist at 22,940. Place stop-loss at 23,250. When the contract falls to 22,700, revise the stop-loss to 23,000. Guide income at 22,400.
As an alternative of promoting futures one can purchase a put choice. We advise going lengthy on 23000-put of February expiry on the prevailing worth when Nifty futures breaks beneath 22,940. By then, the premium of the choice may very well be round ₹300. Goal and stop-loss could be ₹450 and ₹220 respectively. Submit initiating this place, revise the stop-loss to ₹300 when the premium goes as much as ₹400.
Nifty Financial institution
Nifty Financial institution futures (February) (49,288) recorded a lack of 2.1 per cent final week. Alongside was a rise in cumulative OI by 30 per cent to just about 41 lakh contracts. So, like in Nifty futures, Nifty Financial institution futures witnessed a brief build-up.
The PCR of February choices stood at almost 0.7, indicating significantly extra promoting of calls than places, a bearish indication.
Although not a textbook definition of double backside chart set-up, Nifty Financial institution futures had confirmed this sample in early February, sending out a possible bullish development reversal sign. Nevertheless it failed to increase the rally and has now dropped beneath the neckline (50,000).
Nevertheless, it managed to shut above a assist between 49,000 and 49,200. So, it’s crucial to look at the response of Financial institution Nifty futures to this assist band.
If there’s a restoration, which might elevate the contract above 50,000, we’d see an upswing to 51,500 within the brief time period. However, if it falls beneath 49,000, it will probably discover assist at 48,500. However a breach of this degree can set off one other leg of downtrend, doubtlessly to 47,000.
Technique: On the present juncture, we see some uncertainty with respect to the development. Merchants can keep out and may provoke commerce primarily based on which of the 2 keys ranges i.e., 48,500 or 50,000 is breached first.
