Trade Setup for August 14: Will NIFTY50 hold 50-DMA on expiry day? Key levels to watch before expiry

Asian markets update at 7 am

After positive handover from the Wall Street, the GIFT NIFTY is up 0.3%, indicating a positive start for the NIFTY50 today. Meanwhile, the other Asian indices are trading in green as well. Japan’s Nikkei 225 is up 0.6%, while the Hong Kong’s Hang Seng index is up 0.2%.

U.S. market update

• Dow Jones: 39,765 (▲1.0%)
• S&P 500: 5,434 (▲1.6%)
• Nasdaq Composite: 17,187 (▲2.4%)

U.S. indices rose on Tuesday as Wall Street digested cooler-than-expected inflation data and awaited the outcome of consumer prices due later today. The Producer Price Index (PPI), a measure of wholesale inflation, rose 0.1% month-on-month in July, less than the 0.2% forecast. Year-on-year, the PPI rose 2.2%, in line with the Fed's 2% target range.

NIFTY50

• August Futures: 24,161 (▼0.8%)
• Open Interest: 4,79,947 (▲2.5%)

Despite positive cues from Asian markets, the NIFTY50 index witnsessed selling pressure on 13 August and ended the day in the red, below previous day’s doji candlestick pattern. The sharp fall in the indices was due to broad based sell-off in across sectors, primarily the banking pack.

As per our yesterday’s analysis, the NIFTY50 index has been trading between its 20 and 50 day moving averages (DMAs). Until the index breaks this level, the trend may remain range-bound and witness heightened volatiity. However, a close below 50-DMA (around 24,000) will open the doors for its 100-DMA, which is around 23,200 levels.

As per the 15 minute time frame, the index is trading between 24,350 and 23,900. Traders can plan the range-bound strategies within this range. However, a break of 24,200 on the upside and 23,900 on the down side, may provide traders directional clues.

The open interest build-up for today’s expiry has significant call base from 24,300 to 24,500 strikes, indicating multiple resistance for the index around these levels. Conversely, the put base is at 24,000 and 23,500 strikes.

BANK NIFTY

• August Futures: 50,052 (▼1.2%)
• Open Interest: 2,19,319 (▲16.9%)

The BANK NIFTY index also remained under pressure and closed below the psychologically crucial 50,000 mark. The sharp fall in the index was led by sell-off in HDFC Bank, which slipped over 3% due to MSCI's decision to increase the bank's weight in two steps instead of one, coupled with a lower than expected weight change.

As per our yesterday’s analysis, the index is still oscillating between its 50 and 100 day moving averages (DMAs), with sharp bouts of volatility. Additionally, the BANK NIFTY formed a bearish candle on the daily chart with the crossover of 50 and 20 DMAs, indicating weakness.

For today’s expiry, we will be following the same range on the 15 minute timeframe of previous week’s expiry. The BANK NIFTY index has been consolidating between 50,700 and 49,700 zone since 5 August. Traders should monitor this range as the close above or below this range will provide a strong directional move.

The open interest data for today’s expiry has highest call open interest at 50,500 strike, making it as key resistance point. On the other hand, the put base was visible at 49,000 strike, marking it the immediate support for the index.

FII-DII activity

Stock scanner

Under F&O ban: Aarti Industries, Aditya Birla Capital, Aditya Birla Fashion and Retail, Bandhan Bank, Biocon, Birlasoft, Chambal Fertilisers, Granules India, Hindustan Copper, India Cements, IndiaMART InterMESH, LIC Housing Finance, Manappuram Finance, Punjab National Bank, RBL Bank, Steel Authority of India and Sun TV

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.

Disclaimer: Derivatives trading must be done only by traders who fully understand the risks associated with them and strictly apply risk mechanisms like stop-losses. The information is only for consumption by the client and such material should not be redistributed. We do not recommend any particular stock, securities and strategies for trading. The securities quoted are exemplary and are not recommendatory. The stock names mentioned in this article are purely for showing how to do analysis. Take your own decision before investing.