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  4. NIFTY50 zooms out of consolidation, BANK NIFTY reclaims 50-DMA

NIFTY50 zooms out of consolidation, BANK NIFTY reclaims 50-DMA

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Upstox

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4 min read • Updated: February 21, 2024, 8:27 AM

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Summary

BANK NIFTY’s former resistance zone of 46,500-46,800, which coincides with the 50-DMA, will now act as immediate support. This suggests a wider trading range between 46,500 and the all-time high of 48,636. Notably, this bullish move was highlighted in our morning trade setup blog on the 15 February, when the banking index confirmed a bullish Harami reversal pattern on the daily chart.

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NIFTY 50 decisively broke out of its one-month consolidation zone

Asian markets update 7 am

The GIFT NIFTY (+0.08%) edged higher, suggesting a subdued but positive opening for Indian equities today. Asian markets are trading mixed. Japan's Nikkei 225 remains subdued, down 0.1%. The Hong Kong's Hang Seng Index is up 0.1%.

U.S markets update

U.S. stocks closed lower on Tuesday, led by a decline in technology stocks. Shares of Nvidia declined over 4% ahead of its result today. The Dow Jones fell 0.1% to 38,563, while the S&P 500 declined 0.6% to 4,975. The Nasdaq Composite lost 0.9% and ended the day at 15,630

NIFTY50

  • February Futures: 22,217 (▲0.2%)
  • Open Interest: 2,27,234 (▼3.3%)

The NIFTY 50 decisively broke out of its one-month consolidation zone and closed above its all-time high of 22,126. This negated Monday's neutral spinning top pattern and the index formed a bullish engulfing candle on the daily chart, supported by strong gains in banking stocks.

Experts believe that this breakout signals further upside potential. The NIFTY50 now has immediate support around 21,900 levels and is trading above all of its major moving averages (20 and 50).

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Open interest data for the 22 February expiry of the NIFTY50 shows a significant call base at the 22,600 and 22,200 strikes. Conversely, the maximum put base is at the 22,000 and 22,100 strikes. This suggests that for this week's expiry, market participants expect the NIFTY50 to trade in a range of 21,700-22,550.

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BANK NIFTY

  • February Futures: 47,188 (▲1.2%)
  • Open Interest: 1,79,819 (▼0.2%)

After an initial dip, the BANK NIFTY staged a strong comeback, decisively breaching its 50-day moving average (DMA) in the first half and staying above it throughout the day. The rally was fuelled by a rebound in laggards such as HDFC Bank (+2%) and Axis Bank (+2%). As a result, the index reclaimed the crucial 47,000 level at the close.

Experts believe that the former resistance zone of 46,500-46,800, which coincides with the 50-DMA, will now act as immediate support. This suggests a wider trading range between 46,500 and the all-time high of 48,636. Notably, this bullish move was highlighted in our morning trade setup blog on the 15 February, when the banking index confirmed a bullish Harami reversal pattern on the daily chart.

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For BANK NIFTY's today’s expiry, the options data shows significant open interest at the 48,000 & 48,500 call option strikes and 46,000 & 46,500 put option strikes. As per the open interest, traders eye BANK NIFTY’s trading range between 46,000 and 47,800 for today’s expiry.

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FII-DII activity

In the cash market, the Foreign Institutional Investors (FIIs) sold shares worth ₹1,335 crore, while the Domestic Institutional Investors (DIIs) bought shares worth ₹1,491 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: Deepak Nitrite, NTPC and Kotak Mahindra Bank.

Short build-up: Federal Bank, Hero MotoCorp, Birlasoft, Cholamandalam Investment and Exide Industries.

Catch up on yesterday's NIFTY 200 insights! Don't miss our market recap blog, offering valuable insights in a concise format. Click here to read and stay informed.

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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