Trade setup for Friday: Nifty 50 plunges 5-month low, forms a bearish candlestick pattern

As the Nifty 50 faces bearish momentum, it may test immediate support levels at 23,200 (50-week EMA) and 23,000, which is considered a crucial support level. In case of a bounce-back, the 23,500-23,550 range (200 DEMA) could act as immediate resistance. Here’s a breakdown of key insights and technical levels for Friday’s trade setup:

Key Levels for Nifty 50

Resistance: 23,467, 23,524, and 23,618

Support: 23,280, 23,223, and 23,129

The Nifty 50 closed at a five-month low on November 21, forming a bearish candlestick pattern. The index dropped below the 200 DEMA (23,540) with strong bearish indicators, including an RSI of 28.34, signaling a bearish sentiment.

Bank Nifty Key Levels

Resistance: 50,601, 50,805, and 51,136

Support: 49,940, 49,736, and 49,406

Bank Nifty also faced a decline below the 200 DEMA intraday but closed above it, signaling buying interest at lower levels. Still, the negative bias in RSI and MACD continues to weigh on sentiment.

Nifty Call Options Data

The maximum open interest on call options is at the 24,000 strike (62.94 lakh contracts), followed by 23,500 (43.12 lakh contracts). The 23,300 strike saw the highest call writing, indicating resistance in the near term.

Nifty Put Options Data

The maximum open interest for put options is at the 23,000 strike (55.11 lakh contracts), acting as a crucial support level. The maximum put writing is at 23,300, with substantial additions at 22,500.

Bank Nifty Call Options Data

The 52,000 strike holds the highest open interest (25.14 lakh contracts), with resistance levels at 51,000 and 51,500. The highest call writing was observed at the 52,000 strike.

Bank Nifty Put Options Data

The highest open interest for puts is at 49,500 (24.44 lakh contracts), signaling strong support. The maximum put writing occurred at 49,500.

Put-Call Ratio (PCR)

The PCR rose to 0.94 from 0.83, suggesting a slight increase in bullish sentiment as more puts are being sold.

India VIX

Volatility increased for the third consecutive day, climbing to 15.99, adding discomfort for bulls and suggesting heightened market uncertainty.

Long Build-up

27 stocks showed a long build-up, indicating an increase in open interest with price rises, suggesting a bullish trend in those stocks.

Long Unwinding

48 stocks experienced long unwinding, indicating a decline in open interest with price falls, signaling bearish sentiment.

Short Build-up

79 stocks saw an increase in open interest with price declines, indicating more short positions are being built.

Short-Covering

29 stocks experienced short-covering, showing a decrease in open interest with price rises, indicating potential bullish momentum in those stocks.

High Delivery Trades

Stocks with a high share of delivery trades signal more investor interest, indicating a longer-term outlook rather than short-term speculation.

Stocks Under F&O Ban

Added to Ban: Adani Enterprises, National Aluminium Company

Retained in Ban: Aarti Industries, Aditya Birla Fashion & Retail, GNFC, Granules India, Hindustan Copper, Indraprastha Gas

Conclusion: With the Nifty 50 trading below key moving averages and showing bearish technicals, a potential test of the 23,000 level is in the cards. However, support from options data and a rising PCR suggest possible consolidation or bounce-back if key support levels hold. Traders should watch the Bank Nifty closely for signs of stabilization above the 49,500 level.

(Note: All views and strategies expressed are those of the analysts and should be verified with certified experts before taking any trading decisions.)