NIFTY50 & BANK NIFTY expiry: Follow-through or more sideways movement?

Asian markets update 7 am

The GIFT NIFTY is trading slightly higher (+0.1%), suggesting a flat start for the NIFTY50 today. Asian markets are mixed. Japan's Nikkei 225 is down 0.3%, while Hong Kong's Hang Seng Index is up 0.2%.

U.S. markets update

US stocks fell on Wednesday as investors cautiously awaited the release of the Personal Consumption Expenditure (PCE) report, the Fed's preferred inflation gauge, later today.

The Dow Jones Industrial Average closed flat at 38,949, while the S&P 500 fell 0.1% to 5,069. The Nasdaq Composite was down 0.5% at 15,947.

NIFTY50

• March Futures: 22,075 (▼1.3%)
• Open Interest: 1,97,317 (▲31.1%)

Despite the positive start, the NIFTY50 fell over 300 points from its intraday high and found support near its 20-day moving average (around 21,950). This sharp correction came ahead of the release of India’s GDP data and U.S. PCE (Personal Consumption Expenditure), the Federal Reserve's preferred inflation gauge.

While the daily chart shows a bearish engulfing candle, indicating weakness, a fresh open interest build-up after today’s expiry will provide further directional clues. According to experts, the index is still trading in the 21,850-22,300 range. If the NIFTY50 closes below 21,850, the next crucial support is at the 50 DMA, around 21,700.

With the India VIX rising above 16, traders are advised to closely monitor price action near these support and resistance levels, as sharp volatility could lead to a sudden spike in option premiums.

For today’s expiry, the option chain shows a significant concentration of calls near the 22,200 and 22,300 strikes. Conversely, the put base is concentrated at the 22,500 and 21,800 strikes. Based on the positioning of the OI, traders are expecting NIFTY50 to trade between the 21,600 and 22,300.

BANK NIFTY

• March Futures: 46,222 (▼1.7%)
• Open Interest: 1,21,607 (▲37.7%)

The BANK NIFTY encountered resistance at its 50 DMA and closed well below the key swing low of 46,300. This comes after a period of consolidation with high volatility following the breakout on the 20 February.

As highlighted in our yesterday’s blog, the BANK NIFTY was trading in a range of 47,200 and 46,300. A break on either side was expected to signal a directional move. Additionally, the formation of a doji candle on the daily chart indicated indecision among traders.

Yesterday's decisive close below the doji candle and the 46,000 level confirmed potential weakness. However, experts caution that with the India VIX remaining high, follow-through confirmation of this price action is crucial.

Since the 17th of January, the BANK NIFTY has been trading in a wider range between 44,000 and 48,000, with no follow through of the trend. With the recent break below the crucial support (46,300) and the 20 DMA, the next major support level is now seen at 45,000, which coincides with the 200 DMA.

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

FII-DII activity

In the cash market, the Foreign Institutional Investors (FIIs) sold shares worth ₹1,879 crore, while Domestic Institutional Investors (DIIs) purchased shares worth ₹1,827 crore. To track the ratio of long and short open positions of FIIs in the index, log in to https://pro.upstox.com/

Stock scanner

• Long build-up: Havells and Samvardhana Motherson
• Short build-up: Bajaj- Auto, Indian Oil Corporation, Federal Bank, Maruti and ONGC.

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/

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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