NIFTY50 ends below 20-DMA, all eyes on US inflation data

Asian markets update 7 am

Indian equities are set for a positive start with GITY NIFTY trading above 21,700, up 0.2%. This follows gains in the Asian markets where Japan's Nikkei advanced 1.8% to 37,584 and South Korea’s Kospi jumped 1.1% to 2,652.

U.S. market update

U.S. stocks closed mixed on Monday ahead of the release of the inflation figures that will determine the extent and timing of interest rate cuts by the Federal Reserve.

The Dow Jones rose 0.3% to 38,797, while the S&P 500 closed flat at 5,021. The tech-heavy Nasdaq Composite slipped 0.3% to 15,942.

NIFTY50

• February Futures: 21,697 (▼ 0.6%)
• Open Interest: 2,37,030 (▲ 1.4%)

The NIFTY50 started Monday’s session flat and gradually slipped lower, closing below the crucial 20-day moving average (DMA). This move invalidated Friday’s hammer pattern formed on the daily chart.

As highlighted in our weekly outlook blog, the inside bar formed on the NIFTY50’s weekly chart hinted at key levels (high and low) to watch. Yesterday’s close below the 20-DMA and inside bar’s low signals further weakness ahead. Experts believe 21,850 to be the immediate resistance for the NIFTY50.

On a positive note, India’s retail inflation cooled to 5.1% in January compared to 5.6% in December, on account of lower food prices. However, traders are advised to remain cautious as the highly anticipated inflation data from the U.S. will be released later in the evening.

Open interest data for the NIFTY50's 15th February expiry has significant call base at the 22,000 and 21,800 strikes. Conversely, the 21,000 and 20,800 strikes hold the maximum put base. This suggests that market participants expect the NIFTY50 to trade in a range of 21,100-22,100 for 15 February expiry.

You can track open interest of the NIFTY50 here: https://pro.upstox.com/

BANK NIFTY

• February Futures: 45,899 (▼ 1.7%)
• Open Interest: 2,14,874 (▲ 3.4%)

The BANK NIFTY once again witnessed selling pressure and closed below its 200-DMA on Monday. This marked the fifth test of this key moving average in recent days, as regularly highlighted in our previous blogs.

With the BANK NIFTY closing below its 200-DMA, the next major support for the index is at 44,000. Going forward, the index's immediate resistance lies around its 20-DMA, which stands around 45,800.

For BANK NIFTY's February 14th expiry, the options data shows significant open interest at the 46,000 & 47,000 call option strikes and 44,000 & 44,500 put option strikes. As per the open interest, traders eye BANK NIFTY trading range between 43,500 and 46,500 for February 14th expiry.

You can track open interest of the BANK NIFTY here: https://pro.upstox.com/

FII-DII activity

In the cash market, both the Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) turned net buyers on Monday. The FIIs bought shares worth ₹126 crore, while the DIIs purchased shares worth ₹1,711 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: Astral, Coforge, HCL Technologies and Balkrishna Industries.

Short build-up: Bharat Forge, Bandhan Bank, National Aluminium, REC, Hero MotoCorp and Aditya Birla Fashion and Retail.

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/ ➡️F&O➡️Options smartlist/Futures smartlist

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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