Short Build-Up Observed in 61 Stocks, Including HDFC AMC, Adani Enterprises, NMDC, Atul, and Exide Industries, Based on Open Interest Percentage
After a day of rallying on June 19, the market experienced a correction, leading the benchmark indices to retreat from their record closing highs. The weak performance of global counterparts had a negative impact on market sentiment.
The decline in banking, automobile, FMCG, and oil & gas stocks weighed heavily on the market. The BSE Sensex dropped by 216 points to 63,168, while the Nifty50 lost 71 points to reach 18,756. Furthermore, a Dark Cloud Cover pattern emerged on the daily charts, indicating a potential trend reversal to the downside.
Gaurav Bissa, Vice President at InCred Equities, highlighted the formation of the Dark Cloud Cover pattern and suggested that if Monday’s low is breached in the next trading session, the index may experience further downside movement, potentially reaching 18,600.
Despite the negative breadth, the broader markets displayed better performance compared to the benchmarks. Both the Nifty Midcap 100 and Smallcap 100 indices closed with moderate gains.
The India VIX, also known as the fear index, increased by 3.55 percent from 10.84 to 11.23 levels. This rise favored the bears in the market and made the bulls uncomfortable.
We have compiled 15 data points to assist you in identifying profitable trades. Please note that the open interest (OI) and volume data provided for stocks in this article encompass a three-month period, rather than just the current month.
Key levels of support and resistance on the Nifty:
Based on the pivot point calculator, the Nifty is anticipated to find support at 18,723, followed by 18,685 and 18,623. If the index shows upward movement, the key resistance levels to watch for are 18,847, 18,886, and 18,948.
Nifty Bank:
The significant decline was primarily driven by the Bank Nifty, which experienced considerable pressure. It dropped by 304 points to reach 43,634, forming a bearish candlestick pattern on the daily scale, accompanied by above-average volumes.
“The index underperformed compared to the broader markets. In order to witness a bounce towards 44,044 and 44,250 levels, it needs to surpass the 43,750 level. However, if it remains below that level, we may observe weakness towards 43,500 and 43,333 levels,” explained Chandan Taparia, Senior Vice President and Analyst-Derivatives at Motilal Oswal Financial Services.
According to the pivot point calculator, the Bank Nifty is expected to find support at 43,519, followed by 43,392 and 43,186. On the other hand, resistance levels are likely to be encountered at 43,931, 44,058, and 44,264.
Analysis of Call Options Data:
Based on the weekly options data, the highest Call open interest (OI) was observed at the 19,000 strike level, with a significant 1.04 crore contracts. This level is expected to act as a crucial resistance point for the Nifty.
Following closely, the 18,800 strike had an OI of 1.03 crore contracts, while the 18,900 strike had 86.13 lakh contracts.
Call writing activity was observed at the 19,000 strike, resulting in the addition of 41.68 lakh contracts. The 18,900 strike and 18,800 strike followed, with the addition of 39.32 lakh contracts and 36.6 lakh contracts, respectively.
The maximum Call unwinding occurred at the 18,700 strike, leading to the shedding of 7.95 lakh contracts. This was followed by the 18,500 strike and 17,600 strike, which witnessed a reduction of 1.55 lakh and 12,650 contracts, respectively.
Analysis of Put Options Data:
On the Put side, the maximum open interest was observed at the 18,700 strike level, with a substantial 95.12 lakh contracts. This level is expected to serve as a crucial support level for the Nifty50 in the upcoming sessions.
Following closely, the 18,800 strike had an open interest of 65.14 lakh contracts, while the 18,600 strike had 56.67 lakh contracts.
Put writing activity was witnessed at the 18,300 strike, resulting in the addition of 13.74 lakh contracts. This was followed by the 18,600 strike and 17,900 strike, which saw the addition of 9.81 lakh contracts and 3.5 lakh contracts, respectively.
Put unwinding occurred at the 18,800 strike, leading to the shedding of 28.16 lakh contracts. This was followed by the 18,700 strike and 18,000 strike, which witnessed a reduction of 24.6 lakh contracts and 7.38 lakh contracts, respectively.
