NIFTY50 defies bearish engulfing, BANK NIFTY in wait-and-watch mode

Asian markets update 7 am

Buoyed by gains on Wall Street, the GIFT NIFTY is trading 40 points higher, pointing to a positive start for the Indian markets today. However, Asian markets remain mixed. Japan's Nikkei is closed for a holiday, Hong Kong's Hang Seng Index is down 0.2%, while South Korea's Kospi is up 0.6%.

U.S. markets update

US stocks hit record highs on Thursday after chipmaker Nvidia reported better-than-expected quarterly results. The Dow Jones jumped 1.1% to 39,069, while the S&P 500 rose 2.1% to 5,087. The tech-heavy Nasdaq Composite rose 2.9% to 16,041.

NIFTY50

• February Futures: 22,243 (▲0.9%)
• Open Interest: 2,20,720 (▼0.5%)

After a flat start, the NIFTY50 dipped towards its 20-day moving average (around 21,800) in the first half of the session. However, the index found support and staged a sharp V-shaped recovery, rallying over 350 points from its intraday low to a new all-time high. The rally was led by technology stocks with TCS and Infosys gaining 2.4% and 1.5% respectively. Reliance Industries also contributed with a gain of 0.9%.

On the weekly expiry, the NIFTY50 invalidated Wednesday's bearish engulfing pattern. The index showed renewed buying momentum between 21,800 and 21,900 levels, coinciding with its 20-day moving average. Experts believe traders are expected to see a sharp spike in option premiums due to the sharp reversal and intraday volatility. In addition, if the NIFTY50 closes above Wednesday's high (22,249), the index could extend its gains amid a rebound in IT stocks.

The initial OI build of the options chain for the 29 February expiry shows a significant call base at the 23,000 and 22,000 strikes. Conversely, the put base is established at the 22,000 and 21,000 strikes. As per the initial build-up, NIFTY50 is expected to trade between 21,750-22,700 in the upcoming week.

BANK NIFTY

• February Futures: 46,980 (▼0.1%)
• Open Interest: 1,56,906 (▼12.3%)

The BANK NIFTY also had a choppy session, with a sharp reversal from the 46,500 level. The index formed a doji candle on the daily chart, indicating indecision and potential range-bound activity.

Having breached the recent swing high of 46,800, the banking index is now consolidating within a range of 47,200 on the upside and 46,300 on the downside. Experts believe the consolidation will continue until a decisive breakout above or below this range occurs on a daily closing basis.

For BANK NIFTY's 29 February expiry, the options data shows significant open interest at the 47,000 & 47,500 call option strikes and 47,000 & 46,500 put option strikes. As per the open interest, traders eye BANK NIFTY’s trading range between 44,800 and 47,500.

FII-DII activity

In the cash market, the Foreign Institutional Investors (FIIs) sold shares worth ₹1,410 crore, while the Domestic Institutional Investors (DIIs) bought shares worth ₹1,823 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: ABB India, Cummins India, Bharat Electronics, Eicher Motors and Siemens.

Short build-up: Indian Oil Corporation and Bharat Petroleum.

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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