NIFTY50 consolidation continues, BANK NIFTY at make or break level

Asian markets update 7 am

The GIFT NIFTY is trading higher (+0.2%), indicating a flat to positive start for the Indian equities today. Asian markets are also trading in the green. Japan's Nikkei 225 is up 0.3% and Hong Kong's Hang Seng Index rose 0.2%.

U.S. markets update

U.S. stocks ended lower on Monday, having closed at record highs the previous week. Investors are now looking forward to the release of GDP growth rate and January’s reading of personal consumption expenditures (PCE) price index, the Fed's preferred inflation measure.

The Dow Jones Industrial Average dropped 0.2% to 39,069, while the S&P 500 declined 0.4% to 5,069. The Nasdaq Composite fell 0.1% to 15,976.

NIFTY50

• February Futures: 22,141 (▼0.4%)
• Open Interest: 1,82,799 (▼10.07%)

The NIFTY50 index traded in a tight range and ended the volatile session lower. The index formed a negative candle on the daily chart, suggesting further profit-booking at higher levels.

On the daily chart, the NIFTY50 tested the support zone shown below and continued to consolidate near its all-time high. According to experts, the index's near-term resistance remains at 22,300 and key support is at 21,900, which also coincides with its 20-day moving average.

With the volatility index rising 4% to 15.6 ahead of the monthly expiry, traders may want to keep an eye on these levels to gauge future directional clues.

The February 29 option chain shows a significant concentration of calls near the 22,500 and 22,300 strikes. Conversely, the put base is concentrated at the 22,000 and 21,500 strikes. Based on the positioning of the OI, traders are expecting the NIFTY50 to trade between the 21,500 and 22,700 levels for this week's expiry.

BANKNIFTY

• February Futures: 46,607 (▼0.5%)
• Open Interest: 1,32,625 (▼12.1%)

The BANK NIFTY also remained under pressure throughout the day, closing below its 50-day moving average. As regularly highlighted in our daily coverage, the index has been consolidating between 47,200 on the upside and 46,500 on the downside after closing above the recent swing high (46,892).

Experts believe that the index is now at a crucial stage and could decide the direction of the market between this week or next week. They believe that if the BANK NIFTY closes below 46,000, it may slip back to its 200-DMA, which is around 45,000. On the other hand, if the index closes above 47,200, then it may begin its upward journey towards its all-time high. Traders are advised to closely monitor the BANK NIFTY's price action around these levels.

For BANKNIFTY's 29 February expiry, the options data shows significant open interest at the 47,000 & 47,500 call option strikes and 45,000 & 46,000 put option strikes. As per the open interest, traders eye BANKNIFTY’s trading range between 44,800 and 47,500.

FII-DII activity

In the cash market, both the Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) turned net sellers on Monday. The FIIs sold shares worth ₹285 crore, while the DIIs offloaded shares worth ₹5 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: Bharat Forge, Glenmark Pharmaceuticals, Hindustan Petroleum, LIC Housing Finance and Larsen & Toubro.

• Short build-up: Asian Paints, Birlasoft, Bandhan Bank and AU Small Finance Bank.

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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