Technical Report: Nifty 50 Analysis - December 19, 2023 and Pre- Open Market Data for Dec.20

Executive Summary:

The Nifty 50 index exhibited a notable performance on December 19, surpassing the much-anticipated 21,500 mark. However, the index faced resistance at this level and struggled to sustain above it. Analysts suggest that the 21,500 mark remains a key resistance area, and the ability to hold above it could signal the start of another upward momentum. Conversely, a failure to maintain this level may lead to consolidation, with support seen around 22,300-22,200. The market closed moderately higher on this day, with the BSE Sensex rising 122 points to 71,437, and the Nifty 50 advancing 34 points to 21,453.

Technical Analysis:

Candlestick Patterns: The daily charts revealed a small-bodied Bearish candlestick pattern with a long lower shadow on December 19, indicating that support levels are being held, and there is buying interest at lower levels.

Trend Analysis: The Nifty 50 continues to be in a bullish trend, with analysts recommending a strategy of holding long positions with a trailing stop loss. The 5-day EMA, positioned near 21,300, is expected to act as a crucial support going forward.

Resistance and Support Levels: Resistance for the Nifty is anticipated in the zone of 21,500-21,600, where Calls are written on the derivative side. On the downside, 21,350 is identified as a critical support level, and the bullish trend is expected to persist as long as the index stays above this level consistently.

Midcap and Smallcap Performance: The Nifty Midcap 100 and Smallcap 100 indices witnessed profit booking at higher levels, falling 0.38 percent and 0.12 percent, respectively.

?Options Analysis:

?Call Open Interest (OI): Maximum Call OI is observed at the 21,500 strike with 1.13 crore contracts, indicating a key resistance level for the Nifty in the short term. Meaningful Call writing is seen at the 21,500 strike.

Put Open Interest (OI): Maximum Put OI is held at the 21,400 strike, serving as a significant support area for the Nifty. Meaningful Put writing is noted at the 21,400 strike.

Put Call Ratio (PCR): The Nifty PCR increased to 1.13 on December 19, suggesting an increase in bearish sentiment as traders bought more Put options than Calls.

Conclusion:

While the Nifty 50 displayed strength by breaching the 21,500 mark, sustaining above this level remains a challenge. Analysts recommend a cautious approach, with a close eye on the 21,500-21,600 resistance zone and the 21,350 support level. The bullish trend is expected to continue as long as the index remains above 21,350. Traders are advised to monitor options data, especially the 21,500 and 21,400 strikes, for key levels of resistance and support.

?Disclaimer: This report is for informational purposes only and does not constitute financial advice. Investors should conduct their own analysis and seek professional guidance before making investment decisions.