Nifty 50 Pre-Open OI Data Analysis July4

Market Overview: Bulls Take Charge

On July 3, the bulls regained control over Dalal Street, driving benchmark indices to new closing highs. The Nifty 50 index reached an impressive 24,300 level before closing 163 points higher at 24,287. As the market continues to show strength, experts predict further upward movement if the index holds above the 24,200 mark, potentially reaching 24,500 in the coming sessions. However, some consolidation is expected with a support level at 24,000.

Recent Market Performance

The Nifty 50 index gained momentum after a brief phase of profit booking, ending the day with a seven-tenth of a percent gain on July 3. Banking and financial services stocks were the primary drivers behind this surge. Despite the formation of a Doji candlestick pattern on the daily charts, indicating possible consolidation, the market's underlying trend remains positive.

Opening higher at 24,292, the Nifty 50 hit a fresh all-time high of 24,309 during rangebound trading before closing at 24,286.50, up by 163 points. Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, pointed out that such market formations, despite appearing like consolidation at new highs, typically lead to a continuation of the uptrend.

Nifty 50 Open Interest Data Analysis

The weekly options data provides critical insights into the market's future movements. According to the data, 24,500 is expected to be the next resistance level for the Nifty 50, with strong support at 24,000. Here's a detailed breakdown of the options data:

Maximum Open Interest (OI):

• ?25,000 strike: 1.27 crore contracts, 24,500 strike: 87.55 lakh contracts, 24,300 strike: 71.37 lakh contracts
• Maximum Call Writing:24,300 strike: 28.53 lakh contracts, 24,400 strike: 16.17 lakh contracts, 24,700 strike: 15.41 lakh contracts

Maximum Call Unwinding:

• 24,100 strike: 19.36 lakh contracts, 24,200 strike: 15.22 lakh contracts, 24,000 strike: 11.89 lakh contracts

Maximum Put Open Interest:

• 24,000 strike: 1 crore contracts, 23,800 strike: 74.35 lakh contracts, 23,500 strike: 71.26 lakh contracts

Maximum Put Writing:

• 24,200 strike: 49.71 lakh contracts, 24,300 strike: 42.46 lakh contracts, 23,900 strike: 26.97 lakh contracts

Put Unwinding:

• 23,200 strike: 13.52 lakh contracts, 23,600 strike: 11.22 lakh contracts,23,300 strike: 6.35 lakh contracts

The Nifty Put-Call Ratio (PCR) increased to 1.24 on July 3 from 1.15 in the previous session, indicating a bullish sentiment as traders sold more Put options than Call options. A higher PCR generally suggests a firming bullish sentiment, while a lower PCR reflects a bearish mood.

Resistance and Support Levels

• Resistance: Immediate resistance is at 24,500, according to the options data. A significant resistance level is at 25,000, where the maximum open interest is concentrated.
• Support: Immediate support is at 24,200, a crucial level to watch. Strong support is at 24,000, reinforced by significant open interest and Put writing.

Conclusion and Recommendations

The Nifty 50 is poised for further upward movement, provided it maintains support above 24,200. Traders and investors should monitor the resistance level at 24,500 closely, as breaking this could pave the way towards the 25,000 mark. The market's underlying bullish sentiment, supported by strong options data and declining volatility, indicates a favorable environment for long positions.

However, some consolidation is expected before the next upward move, offering potential entry points for those looking to invest. Keeping an eye on the key support level at 24,000 is crucial to manage risk effectively.

Disclaimer

The information provided in this blog is for educational purposes only and should not be considered as financial advice. Investing in the stock market involves risk, and it is essential to conduct thorough research or consult with a financial advisor before making any investment decisions.

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