Summary
The NIFTY50 and BANK NIFTY bulls were back in the driver's seat, shrugging off a potentially bearish signal from last week. However, a cloud of uncertainty hangs over the rally in the form of the India VIX. The volatility index remains elevated around 20, suggesting sharp price swings as the index approaches its immediate resistance zone near 22,800.
Indian markets will be open today for a special trading session, to test the disaster preparedness of the exchanges in case of any major disruptions. The session will be divided into two phases:
- The first phase will run from 9:15-10:00 am
- The second phase will be held from 11:30 am to 12:30 pm
GIFT NIFTY futures closed above the 22,505 (+0.1%) early this morning, suggesting a positive start for the Indian equities today.
Also Read: NSE, BSE special LIVE trading session on May 18: Check timings and key details
U.S. market update
U.S. stocks closed on a mixed note on Friday, with the Dow Jones Industrial Average closing above the 40,000 (+0.3%) mark for the first time. The rally was fuelled by optimism over possible interest rate cuts in September and positive inflation data in April. The S&P 500 gained 0.1% and ended the day at 5,303, while the Nasdaq Composite slipped 0.1% to 16,685.
NIFTY50
May Futures: 22,497 (▲0.2%)Open Interest: 3,95,495 (▼2.2%)
The NIFTY50 had a volatile session on Friday. After an initial dip, the index consolidated in a narrow range and managed to stay above 22,400 throughout the day. It hit an intraday high of 22,502, but couldn't hold on to these gains.
This comes after a positive Thursday, when the NIFTY50 formed a bullish hammer pattern on the daily chart. On 17 May, the index confirmed the reversal pattern as it closed above the high of the hammer candle (as highlighted in our previous blog on the 17 May), suggesting further upside potential. The index also rejected the bearish engulfing pattern that had formed on the weekly chart the previous week.
However, despite these bullish signals, experts urge caution. The volatility index (India VIX) remains elevated at around 20, indicating continued market uncertainty. In addition, the NIFTY50 is approaching its immediate resistance level of 22,800. On the support side, the 22,300-22,350 area offers immediate support, coinciding with the index's 20 and 50-day moving averages. This zone could provide a cushion in the event of a pullback.
The open interest (OI) data of the NIFTY50’s 23 May expiry has highest call OI at 23,000 and 22,500 strike, while the put base is accumulated at 22,000 and 22,400 strikes. Based on the options data, traders are expecting NIFTY50 to trade between 22,000 and 23,000.
BANK NIFTY
May Futures: 48,195 (▲0.2%)Open Interest: 1,60,701 (▲0.4%)
The BANK NIFTY also extended its gains on Friday and regained the 48,000 level on a closing basis. The index has once again found support in the vicinity of its 50-day moving average and is still osciallating between its 20 and 50-day moving averages.
On the daily chart, the index formed a positive candle and closed above the previous day’s high, indicating further strength. Similar to the NIFTY50, the banking index has also negated the bearish engulfing pattern that was formed last week. Going forward, the index has immediate support at the 47,000 level, while resistance remains between the 49,000 and 49,250 zone.
Open interest (OI) data for the 22 May expiry shows a significant call and put base at the 48,000 strike, indicating rangebound activity between the 47,500 and 48,500 levels. The significant OI base of call and put options was also placed at the 48,500 and 47,000 strikes.
FII-DII activity
The Foreign Institutional Investors (FIIs) snapped the eleven-day selling spree and turned net buyers on 17 May. FIIs bought shares worth ₹1,616 crore, while Domestic Institutional Investors (DIIs) bought shares worth ₹1,556 crore. To track the ratio of long and short open positions of FIIs in the index, log in to https://pro.upstox.com/ ➡️F&O➡️FII-DII Activity➡️FII Derivatives
Stock scanner
Long build-up: Crompton Greaves, Dixon Technologies, Container Corporation of India and Bharat Electronics
Short build-up: Voltas, Mphasis and Metropolis
Under F&O ban: AB Capital, Balrampur Chini, Bandhan Bank, Biocon, Birlasoft, GMR Infra, Granules India, Hindustan Copper, Idea, India Cements, Piramal Enterprises, Steel Authority of India (SAIL) and Zee Entertainment
To access a specially curated smartlist of most traded and active stocks, as well as the OI gainers and losers, simply log in: https://pro.upstox.com/ ➡️F&O➡️Options smartlist/Futures smartlist
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.
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