Market Overview: On October 21, Nifty October futures experienced a negative bias, closing 0.3% lower at 24,789. The premium reduced significantly to 8 points from 95 points the previous day. Open interest (OI) also saw a decline of 2.7%, settling at 5.16 lakh contracts.
Technical Analysis: The Nifty formed a bearish candle, suggesting weakness in the market. Despite this, it managed to hold above the 24,700 level, which is critical as it marks the neckline support of a head and shoulder pattern. According to Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates, the 21-day Exponential Moving Average (21-DEMA) at around 25,120 will serve as a key resistance level, followed by 25,240. Sustaining below 24,700 may lead to further weakness.
Bank Nifty Performance: Similarly, Bank Nifty October futures also fell 0.3%, experiencing a sharp decline in premium from 216 points to 77 points, with a 3% decrease in OI. Bank Nifty closed just above the 21-DEMA support near 51,915. The 100-DEMA support is located around 51,090, with last week’s low near 51,000, suggesting that 51,000 – 51,100 could provide short-term support.
Key Insights from Options Data:
Nifty Options:
Significant OI concentration at 25,000 Call and 24,500/24,000 Put levels.
Nifty Put-Call Ratio (PCR-OI) is at 0.59, indicating cautious sentiment.
24,700 is anticipated to be a crucial support level, while 25,250 may act as a significant resistance.
Active trading is noted in the 24,800 – 24,900 Call range and the 24,500 – 24,700 Put range, highlighting resistance between 24,900 – 25,000 and support between 24,500 – 24,700.
Increased call writing between 24,800 and 25,000 suggests sellers are taking positions at these psychological levels, while put writers remain cautious.
Bank Nifty Options:
Substantial OI at the 52,500 Call (36.79 lakh contracts) and 51,000 Put (26.39 lakh contracts).
Active trading in the 52,000 – 52,200 Call range and the 51,700 – 51,900 Put range indicates resistance around 52,000 – 52,200 and support between 51,500 – 51,900.
Conclusion:
The current market sentiment suggests caution among investors, with key support levels being closely monitored. A breakout below 24,700 for Nifty could lead to further downside, while Bank Nifty shows potential resistance around 52,200 and support near 51,500. Market participants should stay alert to upcoming economic indicators and corporate earnings that may influence trading activity.
