Benchmark Nifty bounced backed on 20th March 2020 on account of positive global cues. The benchmark Nifty opened a 21 points gap up at 8,284.45 and recovered losses of the previous day and advance further during the trading session. Nifty closed at 8,745.45 with a net gain of 482 points making a Bullish Candle on the daily chart. On the weekly chart, it made NBNB candle and on the monthly chart, it made a bearish candle. The market is still in the grip of bears and needs positive cues from the global market to start moving upwards. However, a bounce-back rally shall not surprise due to short-covering this week on account of the monthly expiry of F&O.
The FIIs were net sellers with a turnover of 3,345.95Cr while the DIIs were net buyers with a turnover of 2,431.24Cr. Market breadth was positive with 46 stock advancing and 4 declining from the stack of nifty 50. The closing of Nifty at 8,745.45 is well below 200DEMA at 11,483 but above the daily pivot at 8,223.82. The daily Stochastic is at 25 and RSI is at 25 indicating the market is still in the oversold zone and may consolidate or get a bounce-back at this level.
Nifty’s new resistance levels are at 8,883, 9,121, 9,403, and 9,602 while the support levels are at 8,482, 8,234, 8,080, and 7,940. The fear gauge (India VIX) has come down to 67.10 with increased ATR of Nifty and BankNifty due to fear of uncertainty of the markets which is driving the indices volatile. The daily trading range for the next session as per the Nifty chart seems to be very wide now from 80,80 to 9,602.
Bank Nifty also followed the broader Index and closed at 20,317.60 with a gain of 234.10 points making a spinning top candle pattern on the daily chart. New resistance levels are at 20,570, 20,925, 21,351, and 21,675 while key support levels are at 19,858, 19,534, 19,265, and 19,054. The Trading range for BN looks between 19,054 to 21,675 from the daily chart. Max OI on PE is at 18,000 and Max OI on CE is at 22,900. With the PCR for the current OC series (26th Mar) at 0.59 Bank Nifty indicates a negative bias and high volatility.
As per Nifty Option Chain data (26th Mar), Put writing was observed at lower levels from 7,000 and 8,900 whereas Call writing was also seen from 8,600 to 10,500. A very minimal unwinding of Call was seen at lower levels and Put was observed at higher levels. Max OI in PE is at approx 8,500 and CE is at 10,000. The maximum fresh OI is at 8,000 and 9,500 levels. The PCR for the current series is 1.03 which indicates a sideways market. OI data shows the possibility of the next trading range between 8,000 to 9,500 with volatile swings. Traders are advised to be careful from volatility and trade only trends with options strategies with close stops.
Technical analysis with a sound understanding of the market is the key to trading success; however, unexpected (domestic or international) factors make the technical analysis go haywire for a while, hence we have to monitor fresh data and new dynamics of the market during trading hours to consistently make money. We trust the information will be helpful in your own analysis of the market and make trading a profitable and better experience. This analysis has been shared for educational purposes. Please seek your financial adviser’s guidance before trading or investing.
Happy Trading and Keep investing safely!
