NIFTY50 eyes all-time high, BANK NIFTY faces test at 50-DMA

Asian markets update 7 am

The GIFT NIFTY is trading higher (+0.1%), indicating a positive start for the Indian equities today. Asian markets are trading in the red. Japan's Nikkei 225 is down 0.3% and Hong Kong's Hang Seng Index fell 1%.

U.S. market update

U.S. stocks fell on Friday after data showed that the producer prices ( wholesale inflation) rose 0.3% in January. The reading was higher than the expectation of 0.1%. As a result, all the three major indices closed in the red. The Dow Jones slipped 0.3% to 38,628, while the S&P 500 dropped 0.4% and closed at 5,005. The tech-heavy Nasdaq Composite fell 0.8% to close at 15,775.

NIFTY50

• February Futures: 22,097 (▲0.3%)
• Open Interest: 2,32,266 (▲1.4%)

The NIFTY50 extended its winning streak for the fourth consecutive day, closing Friday's session higher. The index rebounded sharply from the 21,500 levels last week to close near its all-time high.

On the daily chart, the NIFTY50 has crucial support at its 20-day moving average (21,700). Experts believe that if the NIFTY50 closes above its all-time high (22,126), then the index could move out of its one-month consolidation zone of 1,000 points. Conversely, if the index breaches the 20-DMA, the next key support is at the 50-DMA (21,500).

The initial build-up of the option chain shows a significant call base at the 22,600 and 22,100 strikes. Conversely, the put base is established at 22,000 and 21,700 strikes. As per the initial build-up, NIFTY50 is expected to trade between 21,450-22,550 in the upcoming week.

BANK NIFTY

• February Futures: 46,053 (▲0.1%)
• Open Interest: 1,87,630 (▼0.2%)

Building on the gains of the last three days, the BANK NIFTY closed higher on Friday, supported by a rebound in PSU banks and select private banking heavyweights.

As previously mentioned in our Friday’s trade setup blog, the BANK NIFTY faces a hurdle between 46,500 and 46,800 zone, near the 50-DMA. Essentially, the index is currently trading between its 20-DMA (around 45,600) and 50-DMA (around 46,800). Traders should closely monitor the price action around these levels. A breakout on the either side could provide further directional clues.

For BANK NIFTY's February 21 expiry, the options data shows significant open interest at the 47,000 & 46,500 call option strikes and 46,000 & 44000 put option strikes. As per the open interest, traders eye BANK NIFTY’s trading range between 44,500 and 47,800 for current week’s expiry.

FII-DII activity

In the cash market, both the Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) turned net buyers on Friday. The FIIs bought shares worth ₹253 crore, while the DIIs purchased shares worth ₹1,571 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: Glenmark Pharma, Wipro, Bajaj Auto, Polycab and Federal Bank.

Short build-up: Gujarat Gas.

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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