How the News Is Affecting the Market
Strong Start to the Monthly F&O Expiry Week
Markets Following Earnings
On August 26, the market gained 0.8%, marking a strong beginning to the monthly Futures & Options (F&O) expiry week. The Nifty 50 index maintained its upward momentum for the eighth consecutive day, driven by positive signals from momentum indicators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD). While experts suggest the possibility of some consolidation, the index is expected to target immediate resistance levels at 25,100, followed by 25,400. On the downside, immediate support is projected at 24,950, with a further support level at 24,700.
Key Levels for Nifty 50
- Resistance Levels (Based on Pivot Points): 25,041, 25,081, and 25,146
- Support Levels: Immediate support at 24,950, followed by 24,700
Special Formation: Bank Nifty Insights
The Bank Nifty index has formed a small bullish candlestick pattern with a long upper shadow on the daily timeframe, indicating selling pressure at higher levels. The index rose by 0.4% to 51,148, staying above all key moving averages. However, it failed to close above the downward-sloping resistance trendline in Monday's session. A close above this trendline is anticipated to initiate the next phase of the upward movement.
Nifty Call Options Data
- Key Resistance Levels: According to the monthly options data, the 26,000 strike holds the maximum open interest with 81.28 lakh contracts, indicating it as a significant resistance level for Nifty in the near term. This is followed by the 25,500 strike (78.31 lakh contracts) and the 25,000 strike (69.12 lakh contracts).
- Call Writing Activity: Maximum call writing was observed at the 26,100 strike, with an addition of 24.5 lakh contracts, followed by the 25,500 and 26,000 strikes, which added 19.03 lakh and 14.62 lakh contracts, respectively.
- Call Unwinding Activity: The highest call unwinding occurred at the 24,800 strike, shedding 20.88 lakh contracts, followed by the 24,900 and 25,300 strikes, shedding 11.31 lakh and 4.6 lakh contracts, respectively.
Nifty Put Options Data
- Key Support Levels: The 24,000 strike recorded the maximum open interest on the put side, with 91.41 lakh contracts, serving as a key support level for Nifty. This was followed by the 25,000 strike (86.99 lakh contracts) and the 24,500 strike (74.51 lakh contracts).
- Put Writing Activity: The maximum put writing was at the 25,000 strike, adding 43.03 lakh contracts, followed by the 24,900 and 24,800 strikes, with additions of 30.67 lakh and 12.8 lakh contracts, respectively.
- Put Unwinding Activity: The most significant put unwinding occurred at the 23,900 strike, which shed 2.11 lakh contracts, followed by the 24,700 and 24,100 strikes, shedding 1.98 lakh and 49,175 contracts, respectively.
Bank Nifty Call Options Data
- Key Resistance Levels: For the Bank Nifty, the 52,000 strike holds the maximum open interest, with 30.85 lakh contracts, indicating a key resistance level in the short term. This is followed by the 51,500 strike (25.38 lakh contracts) and the 51,200 strike (20.83 lakh contracts).
- Call Writing Activity: The 51,300 strike saw maximum call writing, with the addition of 10.62 lakh contracts, followed by the 51,200 strike (10.35 lakh contracts) and the 51,700 strike (6.55 lakh contracts).
- Call Unwinding Activity: The highest call unwinding was at the 51,000 strike, shedding 10.57 lakh contracts, followed by the 50,900 and 50,800 strikes, which shed 5.12 lakh and 2.04 lakh contracts, respectively.
Bank Nifty Put Options Data
- Key Support Levels: The 51,000 strike recorded the highest open interest on the put side, with 26.48 lakh contracts, serving as a key support level for the index. This was followed by the 50,000 strike (22.98 lakh contracts) and the 50,500 strike (19.35 lakh contracts).
- Put Writing Activity: The 51,200 strike saw the maximum put writing, adding 9.38 lakh contracts, followed by the 50,800 strike (6 lakh contracts) and the 51,300 strike (5.83 lakh contracts).
- Put Unwinding Activity: The most significant put unwinding occurred at the 50,400 strike, which shed 2.58 lakh contracts, followed by the 50,300 and 52,000 strikes, shedding 39,315 and 23,835 contracts, respectively.
Additional Market Indicators
Put-Call Ratio: The Nifty Put-Call Ratio (PCR), a key indicator of market sentiment, rose to 1.31 on August 26, up from 1.27 in the previous session. A PCR above 1 typically indicates a bullish sentiment, while a PCR below 0.7 reflects a bearish mood.
India VIX: Volatility continued its uptrend but remained below the 15 mark, suggesting a favorable trend for bullish market participants. The India VIX, a measure of market volatility, increased by 1.79% to 13.80, up from 13.55 in the previous session.
Long Build-Up: A long build-up was observed in 73 stocks, indicating increased open interest (OI) and price, a sign of bullish positions.
Long Unwinding: Conversely, 15 stocks experienced long unwinding, marked by a decline in OI along with a fall in price.
F&O Ban: Current Status
- Stocks in F&O Ban: Aarti Industries, Aditya Birla Fashion and Retail, Balrampur Chini Mills, Birlasoft, Chambal Fertilisers and Chemicals, Indian Energy Exchange, India Cements, RBL Bank.
- Stocks Removed from F&O Ban: GNFC, Granules India, Hindustan Copper, NALCO, Sun TV Network.
Conclusion
The market's positive start to the F&O expiry week reflects sustained bullish sentiment, underpinned by strong technical indicators and robust options data. However, traders should remain cautious of potential consolidation and monitor key resistance and support levels closely. As the market navigates this critical phase, understanding these data points can help investors make more informed trading decisions.