Nifty 50 Pre-Open Analysis for August 14

Post-Market Analysis for August 13

On August 13, bears dominated Dalal Street, causing the benchmark indices to decline by nearly nine-tenths of a percent. The Nifty 50 index dropped 208 points to close at 24,139, finding support at 24,100. The market's structure appears weak, with experts suggesting that the index may remain in a consolidation and rangebound mode as long as it holds above the 24,000 level. The immediate hurdle on the higher side is at 24,500, and a break on either side (24,000-24,500) is likely to determine the next direction for the index.

Resistance and Support Levels (Based on Pivot Points)

• Resistance: 24,298, 24,356, 24,449
• Support: 24,112, 24,055, 23,962

Special Formation

In the previous session, Nifty formed a High Wave pattern, followed by a bearish candlestick pattern on the daily charts. Momentum indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) remain in negative territory, reinforcing the bearish sentiment.

Pre-Open Open Interest (OI) Data for August 14

Call Options:

• Maximum Open Interest: 25,000 strike (1.26 crore contracts) - Key resistance level
• Significant Levels: 24,500 strike (93.64 lakh contracts), 24,400 strike (84.31 lakh contracts)
• Maximum Call Writing: 24,300 strike (51.09 lakh contracts), followed by 24,500 (46.5 lakh contracts) and 24,200 (44.02 lakh contracts)
• Maximum Call Unwinding: 25,200 strike (shed 2.27 lakh contracts), followed by 25,100 (shed 1.48 lakh contracts) and 24,900 (shed 57,600 contracts)

Put Options:

• Maximum Open Interest: 23,500 strike (67.48 lakh contracts) - Key support level
• Significant Levels: 24,000 strike (52.11 lakh contracts), 23,000 strike (41.79 lakh contracts)
• Maximum Put Writing: 23,900 strike (14.8 lakh contracts), followed by 23,700 (13.85 lakh contracts) and 23,500 (13 lakh contracts)
• Maximum Put Unwinding: 24,300 strike (shed 16.79 lakh contracts), followed by 24,400 (shed 16.44 lakh contracts) and 23,000 (shed 10.28 lakh contracts)

Nifty Put-Call Ratio (PCR)

• The PCR fell to 0.78 on August 13 from 1.03 levels in the previous session. This decline indicates an increase in bearish sentiment as traders sold more Call options than Put options.

Volatility

• The India VIX rose 1.89 percent to 16.17, up from 15.87 levels. The increase in volatility favours the bears, and as long as the VIX remains above the 15 mark, bulls need to exercise caution.

Conclusion and Recommendations

The Nifty 50 is likely to remain rangebound between 24,000 and 24,500 in the near term. A break on either side of this range could determine the next significant move in the market. The resistance at 24,500 and support at 24,000 are crucial levels to monitor. Given the rising volatility and bearish sentiment, traders should be cautious and consider deploying hedging strategies to protect their positions.

Recommendations:

• Short-Term Traders: Watch for a break above 24,500 or below 24,000 for clear direction. Consider selling Call options at resistance levels or buying Put options if the index breaches the support level.
• Long-Term Investors: Maintain a cautious stance and avoid aggressive buying until the market shows signs of stabilization.
• Hedging: Utilize options strategies like straddles or strangles to hedge against potential volatility.

Disclaimer: The information provided in this report is for educational purposes only and should not be construed as financial advice. Trading in financial markets involves risk, and you should consult with a qualified financial advisor before making any investment decisions. The authors of this report are not responsible for any financial losses that may occur as a result of using this information.

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