Nifty Pre-Open OI Analysis and Intraday Trading Recommendations for April 5,2024

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Market Analysis:?The Indian stock market displayed resilience on April 4, with the BSE Sensex surging 351 points to close at 74,228, primarily driven by gains in technology and banking stocks. The Nifty 50 also recorded significant gains, rising 80 points to end at a record closing high of 22,515. Notably, this marked the first time the market closed above the 22,500-mark. The recovery from the day's low of 22,300, coupled with renewed buying interest in the final trading hours, contributed to this milestone.

Technical analysts suggest that the prevailing trend remains bullish, supported by key moving averages and momentum indicators. The Nifty formed a bearish candlestick pattern with a long lower shadow on the daily charts, indicating strong buying interest at lower levels. Furthermore, the index continued to trade above all key moving averages and defended the 10-day EMA of 22,300 level, reinforcing bullish sentiment.

Expert Commentary:?Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy, emphasized the importance of the Reserve Bank of India's Monetary Policy Committee meeting scheduled for April 5 in providing further direction to the market. He noted that while the Nifty formed support at 22,500, its sustainability above this level would hinge on the outcome of the MPC announcement. Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, highlighted the Nifty's trajectory towards the upper end of the rising channel at 22,700, identifying the 22,350 – 22,300 zone as crucial support.

Volatility and Options Analysis:?The India VIX, the fear index, declined by 1.34 percent to 11.22, marking its lowest level since November 15 last year. This decrease over four consecutive days has bolstered bullish sentiment among investors. Options data indicates significant open interest at the 22,700 strike, acting as a key resistance level for the Nifty, with substantial call writing observed at this level. On the put side, the 22,500 strike holds the maximum open interest, serving as a crucial support level for the index.

Intraday Trading Recommendations:?Based on the analysis and expert commentary, the following intraday trading strategies are proposed:

1. Long Position above 22,500:?Traders may initiate long positions if the Nifty crosses above the 22,500 level, targeting a potential upside towards 22,700. Stop-loss can be placed below 22,400 to manage risk.

2. Short Position below 22,400:?If the Nifty breaches the 22,400 support level, short positions can be considered with a target around 22,300. A stop-loss above 22,500 would help mitigate losses in case of a reversal.

3. Call Option Strategy:?Traders anticipating a bullish move can consider buying Nifty Call options with a strike price near 22,500, aiming for an upside target of 22,700. However, adequate risk management through stop-loss is advised.

4. Put Option Hedge:?For traders hedging against potential downside risk, purchasing Nifty Put options with a strike price around 22,500 could provide protection in case of a market downturn. This strategy allows for capitalizing on any significant pullbacks while limiting downside risk.

Disclaimer:?The trading recommendations provided above are based on technical analysis and options data analysis. However, trading in financial markets involves inherent risks, and individuals should conduct their own research or consult with a financial advisor before making any investment decisions. The recommendations provided herein do not guarantee profits and may result in losses. Neither the author nor any associated entities shall be liable for any losses incurred based on the information provided in this report. Investors are urged to exercise caution and trade responsibly.

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