NIFTY50 tests key support: 50-DMA in focus for follow-through

Asian markets update 7 am

Indian equities may start the day on a flat to negative note, mirroring cues from the GIFT NIFTY which is trading 0.1% lower. Asian markets are mixed. Japan’s Nikkei 225 continued its losing streak, slipping 0.4%, while Hong Kong’s Hang Seng Index once again bucked the trend and advanced 0.4%.

U.S. market update

US stocks closed mixed on Wednesday as tech giants such as Nvidia, Meta and Apple came under selling pressure. The Dow Jones Industrial Average gained 0.1% to close at 39,043, while the S&P 500 slipped 0.1% to 5,165. The tech-heavy Nasdaq Composite lost 0.5% to end the day at 16,177.

NIFTY50

• March Futures: 22,103 (▼1.6%)
• Open Interest: 2,43,515 (▼2.6%)

The NIFTY50 broke out of a six-day consolidation and fell over 1.5% on Tuesday amid a broad-based sell-off in the broader market. The NIFTY50 index formed a bearish engulfing candle on the daily chart and posted its largest single day decline since the 23rd of January.

The NIFTY50 has experienced at least three significant one-day declines since January, as shown in the chart. However, these corrections haven't been sustained as the index has reversed course the following day. Traders should focus on the price action around the swing low of 21,860 and the 50-day moving average, which is also near this level. A decisive close below this support zone will provide a clear directional signal.

For today’s expiry, the option chain shows a significant concentration of calls near the 22,500 and 22,400 strikes. Conversely, the put base is concentrated at the 21,700 and 21,500 strikes. Based on the positioning of the OI, traders are expecting NIFTY50 to trade between 21,600 and 22,400.

BANK NIFTY

• March Futures: 47,081 (▼1.0%)
• Open Interest: 1,28,528 (▼1.3%)

While the benchmark indices extended their losses, the BANK NIFTY showed some resilience, closing lower but outperforming the broader markets. The strength was driven by heavyweight private sector banks.

On the daily chart, the BANK NIFTY formed a bearish candle, but more importantly, the index managed to close just above its 20-DMA (around 46,900). As mentioned in yesterday’s blog, this area provided strong support during yesterday's expiry. Experts remain optimistic as the BANK NIFTY is trading above its key moving averages, forming a higher-high and higher-low structure on the daily chart. They believe that the broader trend is likely to continue as long as the index remains above the 50-DMA (around 46,500).

For BANK NIFTY's 20 March expiry, the initial open interest build-up shows a significant base at the 47,000 & 47,500 call option strikes and 47,000 & 46,000 put option strikes. Based on the initial build-up, traders are eyeing BANK NIFTY’s trading range between 48,000 and 45,500 for the 20 March expiry.

FII-DII activity

In the cash market, the Foreign Institutional Investors (FIIs) turned net sellers and sold shares worth ₹4,595 crore, while the Domestic Institutional Investors (DIIs) remained net buyers and purchased shares worth ₹9,093 crore. To track the ratio of long and short open positions of FIIs in the index, log in to https://pro.upstox.com/

Stock scanner

Long build-up: ITC

Short build-up: NMDC, RBL Bank, India Cements, BHEL and Multi Commodity Exchange

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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