Nifty 50 Market Sentiments Report for August 13

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Post Market Analysis - August 12:

On August 12, the Nifty 50 displayed resilience amidst the ongoing concerns over the Hindenburg allegations. The index showed a smart recovery from the day's low, ultimately closing with a minor loss of 21 points at 24,347. Despite the pressure, the Nifty managed to remain above the 5-day Exponential Moving Average (EMA) at 24,318 but failed to close above the 21-day EMA at 24,391. This signals a consolidation phase that may continue unless the index decisively breaks above the 24,400 level. The immediate support lies within the 24,300-24,200 zone, while a breach above 24,400 could push the index towards 24,700.

A notable formation observed on the daily charts was a small bullish candlestick pattern with long upper and lower shadows, resembling a High Wave candlestick pattern. This pattern typically indicates upcoming volatility, a sentiment reinforced by the negative momentum indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD).

Open Interest (OI) Data Analysis:

Resistance Levels:

a)???? The resistance based on pivot points is situated at 24,444, 24,505, and 24,605.

b)???? Maximum open interest (OI) on the Call side was seen at the 25,000 strike, with 1.25 crore contracts, followed by the 25,500 (65.39 lakh contracts) and 24,800 (50.55 lakh contracts) strikes.

c)???? Significant Call writing was observed at the 25,000 strike, which added 38.03 lakh contracts, making it a formidable resistance level in the near term.

Support Levels:

a)???? The support based on pivot points is identified at 24,244, 24,183, and 24,083.

b)???? On the Put side, the 23,500 strike holds the maximum OI with 54.47 lakh contracts, positioning it as a key support level. It was followed by the 24,000 strike (51.91 lakh contracts) and the 24,300 strike (39.51 lakh contracts).

c)???? Maximum Put writing was observed at the 23,500 strike, with an addition of 19.66 lakh contracts, reinforcing the 23,500 level as a critical support zone.

Put-Call Ratio (PCR):

The Nifty PCR fell slightly to 1.03 from the previous session's 1.09, indicating a balanced sentiment with a slight bearish tilt. A PCR above 0.7 generally suggests bullish sentiment, while a ratio below 0.7 indicates a bearish outlook. The current PCR suggests caution, with traders slightly leaning towards a defensive stance.

Volatility:

The India VIX, which measures market volatility, increased by 3.47 percent, reaching 15.87 from 15.34 in the previous session. The rising VIX, moving closer to the 16 mark, signals caution for the bulls, indicating potential market swings in the near term.

Conclusion and Recommendations:

The Nifty 50 remains in a consolidation phase, with the 24,400 level emerging as a critical resistance point. A decisive break above this level could see the index move towards the 24,700 mark, while a failure to sustain above 24,400 might prolong the consolidation within the 24,300-24,200 zone. The market is expected to remain volatile, as indicated by the High Wave candlestick pattern and the rising VIX. Traders are advised to monitor the 24,400 level closely, as well as the 25,000 strike's OI data for resistance and the 23,500 strike's OI data for support.

Disclaimer: This report is for informational purposes only and does not constitute financial advice. Market conditions can change rapidly, and trading involves significant risk. Please consult with a qualified financial advisor before making any trading decisions. The author of this report is not responsible for any losses incurred as a result of using this information.