Nifty 50 Pre-Open OI Data Analysis and Possible Intraday Trading Strategies -Aptil 8

Market Analysis:

The Indian stock market is anticipated to experience volatility in the upcoming session, with a focus on the 22,550-22,600 area serving as a significant hurdle on the higher side. A decisive close above this zone could propel the Nifty 50 towards 22,800 and then the 23,000 mark. Conversely, the key support zone for the index lies between 22,300-22,200. Experts note that declining volatility has provided comfort for bullish sentiments in the market.

On April 5, the BSE Sensex witnessed a minor uptick of 21 points to reach 74,248, following the Monetary Policy Committee's decision to maintain the repo rate at 6.5 percent for the seventh consecutive time. However, the Nifty 50 fell marginally by 1 point to 22,514, forming a bullish candlestick pattern with a lower shadow on the daily charts, suggesting buying interest at lower levels. This indicates that the market had already factored in the outcome of the RBI policy meeting.

For the week, the index recorded a gain of 0.84 percent. Technical analysts suggest that the current consolidation phase is likely to persist within the range of 22,200 to 22,550 levels. Immediate support is identified at 22,300, with a broader support zone extending from 22,150 to 22,200.

Open Interest (OI) Data Analysis:

Analysis of the weekly options data reveals that the maximum Call open interest is observed at the 23,000 strike, indicating a potential resistance level for the Nifty in the short term. Additionally, significant Call writing is noted at the 22,800, 23,000, and 23,500 strikes. On the Put side, the 22,500 strike holds the maximum open interest, serving as a key support level. Meaningful Put writing is observed at the 22,400 and 21,500 strikes.

The Nifty Put Call ratio (PCR) stood at 1.03 on April 5, indicating a slight decline from the previous session. A PCR above 1 suggests increasing bullish sentiment, while a PCR below 0.7 indicates bearish sentiment.

Intraday Trading Strategies:

Based on the analysis provided, here are four possible intraday trading entry and exit levels for Nifty 50:

1. Long Entry: If the Nifty 50 breaches above the resistance level of 22,600, traders may consider initiating long positions with a target of 22,800. A stop-loss could be placed below the support level of 22,550.
2. Short Entry: Conversely, if the index falls below the support level of 22,300, traders may consider short positions with a target of 22,200. A stop-loss could be placed above the resistance level of 22,350.
3. Breakout Entry: A decisive breakout above the resistance of 22,800 could signal further upside momentum, warranting long positions with a target of 23,000. A stop-loss could be placed below the breakout level.
4. Reversal Entry: In case of a sharp decline below the support of 22,150, traders may anticipate a trend reversal and initiate short positions with a target of 21,900. A stop-loss could be placed above the support level.

Disclaimer:

The provided analysis and trading strategies are for informational purposes only and should not be considered as financial advice. Trading in the stock market involves risks, and individuals should conduct their own research and consult with a financial advisor before making any investment decisions. The author and publisher do not guarantee the accuracy or completeness of the information provided, and shall not be held responsible for any trading losses incurred as a result of using this information.

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