Trade setup for 20 January: NIFTY50's second doji hints at further indecision, BANK NIFTY seeks direction within its 50 and 100 DMAs
Upstox
4 min read • Updated: January 20, 2024, 8:40 PM
Summary
Indian markets are likely to open higher, major US markets indices closed higher on Friday. NIFTY50 will react to Reliance Industries and HUL Q3 results.
Asian markets update 7 am
Buoyed by the positive momentum of global equities, GIFT NIFTY's early gains signal a promising start for Indian markets today. However, other Asian markets remain closed for the holiday.
US market update
US equities rallied on Friday, driven by potential optimism over interest rate cuts and the outperformance of technology stocks, particularly those in the artificial intelligence sector. Both the Dow Jones and the S&P 500 hit record highs, with the Dow up 1% and the S&P 500 up 1.2%. The tech-heavy Nasdaq led the way, rising 1.7%.
NIFTY50 January Futures: 21,672 (▲0.6%) Open Interest: 2,23,440 (▲0.7%)
The NIFTY50 snapped its three-day losing streak on Friday, surging 0.7% on the back of positive global cues and broad based buying across sectors. Among the sectoral gainers, Oil & Gas (+1.66%), Metal (+1.35%) and FMCG (+1.23%) led the charge. Media (-0.96%) and Nifty Bank (-0.03%) were the laggards.
The daily chart of the NIFTY50 once again displayed a doji candle, reflecting indecision among the traders. However, better than expected results from Reliance Industires (released yesterday) are likely to influence the market direction. Analysts cite the crucial resistance level of 20,851 ( Wednesday’s high) for the bulls. Should the index remain below this level, further profit-booking is expected.
On the options front, the maximum open interest for call options is placed at 22,000 and 21,800 strikes. On the other hand, highest open interest for put options lies at 21,500 and 21,000 strikes for 25 January expiry. As per the options data, the trading range for NIFTY50 could be confined between 21,900 and 21,000.
You can track open interest of the NIFTY50 here: https://pro.upstox.com/
BANK NIFTY January Futures: 45,797 (▼0.06 %) Open Interest:1,44,971 (▼1.5 %)
Despite a gap-up opening, the BANK NIFTY couldn't hold on to its early gains and ran into resistance near its 50-day moving average (DMA). As highlighted in yesterday's blog, the index not only invalidated the inverted hammer pattern but also closed below the previous day's close, suggesting potential weakness.
Adding to the bearish concerns, a large bearish engulfing candle is forming on the weekly timeframe. This pattern, if confirmed, could add to the selling pressure. The index is currently hovering between the 50 and 100 DMAs, with a decisive break on either side likely to determine the market's direction.
On the options front, the BANK NIFTY call options have the maximum open interest at the 48,000 and 47,000 strikes. Conversely, the highest open interest for the January 25 put options is at the 46,000 and 45,000 strikes. Based on the options data, the trading range for BANK NIFTY could be confined between 47,000 and 45,000.
You can track open interest of the BANK NIFTY here: https://pro.upstox.com/
FII-DII activity
In the cash market, the Foreign Institutional Investors(DIIs) crore sold shares worth ₹3,689 crore, while the Domestic Insitutional Investors(DIIs) bought shares worth ₹2,638 crore . To track the ratio of long and short open positions of FIIs in the index, log in to https://pro.upstox.com/ ➡️F&O➡️FII-DII Activity➡️FII Derivatives
Stock scanner
Long build-up: REC Ltd, Indian Railway Catering and Tourism Corporation (IRCTC), Oil and Natural Gas Corporation(ONGC), Bharti Airtel and NTPC.
Short build-up: IndusInd Bank, RBL Bank, Dixon and Chambal Fertilisers.
To access a specially curated smartlist of most traded and active stocks, as well as the OI gainers and losers , simply log in: https://pro.upstox.com/
In Futures and Options or F&O, long build-up means an increase in Open Interest (OI) along with an increase in price, and short build-up means an increase in Open Interest(OI) along with a decrease in price.
Source: Upstox and NSE.
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