Trade setup for Monday: Top 15 things to know before the opening bell- Grow Mudra

Trade setup for Monday: Top 15 things to know before the opening bell

23 Dec , 2024 By : Debdeep Gupta

Nifty Trade Setup

The market has seen a downward trend throughout last week, falling 1.5 percent on December 20 and losing 4.8 percent for the week. Sentiment turned significantly bearish, with the Nifty 50 falling below the 200-day EMA (23,700) on a closing basis, accompanied by a negative bias in momentum indicators. Hence, if the index sustains below 23,700, the November low (23,263) cannot be ruled out in the upcoming sessions. However, in the event of a bounce-back, the first hurdle is expected to be at 23,900, followed by 24,065, which is seen as a key resistance zone, according to experts.

Here are 15 data points we have collated to help you spot profitable trades:

1) Key Levels For The Nifty 50 (23,588)

Resistance based on pivot points: 23,932, 24,057, and 24,259

Support based on pivot points: 23,528, 23,404, and 23,202

Special Formation: The Nifty 50 formed a long bearish candlestick pattern on the daily charts, with above-average volumes. Following Friday’s fall, the index is now trading below all key moving averages, with the 200-day EMA being the last one broken on Friday. Furthermore, the index is trading below the lower band of the Bollinger Bands, while the momentum indicators—RSI (Relative Strength Index) at 34 and MACD (Moving Average Convergence Divergence) dropping below the zero line with a negative crossover—are all signaling weakness.

2) Key Levels For The Bank Nifty (50,759)

Resistance based on pivot points: 51,389, 51,629, and 52,019

Support based on pivot points: 50,610, 50,369, and 49,980

Resistance based on Fibonacci retracement: 51,580, 52,131

Support based on Fibonacci retracement: 50,664, 49,787

Special Formation: The Bank Nifty also corrected throughout the week, forming a large bearish candlestick pattern on the daily timeframe with lower highs and lower lows for the fourth consecutive session. The banking index is also trading below the lower band of the Bollinger Bands and is 324 points away from the 200-day EMA (50,435), while it is already below the 10, 20, 50, and 100-day EMAs. The RSI has dropped to 35, and the MACD is near the zero line with a negative bias. All of these indicators point to weakness. The index fell 1.6 percent on Friday, with above-average volumes, and lost 5.3 percent for the week.

3) Nifty Call Options Data

According to the monthly options data, the maximum Call open interest was seen at the 24,000 strike (with 92.14 lakh contracts). This level can act as a key resistance level for the Nifty in the short term. It was followed by the 24,500 strike (84.97 lakh contracts), and the 24,700 strike (58.25 lakh contracts).

Maximum Call writing was observed at the 24,000 strike, which saw an addition of 28.93 lakh contracts, followed by the 23,900 and 24,200 strikes, which added 25.94 lakh and 23.02 lakh contracts, respectively, while the maximum Call unwinding was seen at the 24,300 strike, which shed 1.77 lakh contracts, followed by the 22,500, which shed 23,950 contracts.

4) Nifty Put Options Data

On the Put side, the 23,000 strike holds the maximum open interest (with 82.1 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 23,500 strike (66.7 lakh contracts), and the 24,000 strike (55.93 lakh contracts).

The maximum Put writing was placed at the 23,200 strike, which saw an addition of 21.9 lakh contracts, followed by the 22,500, and 22,800 strikes, with 12.31 lakh, and 6.43 lakh contracts added, respectively, while the maximum Put unwinding was seen at the 24,000 strike, which shed 26.53 lakh contracts, followed by the 24,500 and 24,200 strikes, which shed 6.87 lakh and 5.1 lakh contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the maximum Call open interest was seen at the 53,000 strike, with 31.49 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 52,500 strike (26.71 lakh contracts) and the 52,000 strike (21.95 lakh contracts).

Maximum Call writing was visible at the 52,000 strike (with the addition of 7.79 lakh contracts), followed by the 51,000 strike (7.46 lakh contracts) and the 51,500 strike (6.61 lakh contracts), while the maximum Call unwinding was seen at the 52,700 strike, which shed 39,285 contracts, followed by the 52,600 and 48,500 strikes, which shed 14,325 and 7,950 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the 49,000 strike holds the maximum open interest (with 16.5 lakh contracts), which can act as a key support level for the index. This was followed by the 50,000 strike (15.28 lakh contracts) and the 51,000 strike (10.32 lakh contracts).

The maximum Put writing was observed at the 50,800 strike (which added 3.07 lakh contracts), followed by the 50,700 strike (1.59 lakh contracts) and the 48,500 strike (1.38 lakh contracts), while the maximum Put unwinding was seen at the 51,000 strike, which shed 3.03 lakh contracts, followed by the 52,000 and 51,500 strikes, which shed 2.82 lahks and 2.65 lakh contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, dropped to 0.8 on December 20, from 0.91 level in the previous session.

The increasing PCR, or being higher than 0.7 or surpassing 1, means traders are selling more Put options than Call options, which generally indicates the firming up of a bullish sentiment in the market. If the ratio falls below 0.7 or moves towards 0.5, then it indicates selling in Calls is higher than selling in Puts, reflecting a bearish mood in the market.

9) India VIX

The India VIX, the volatility index, jumped to 15.07 on Friday, up 3.88 percent from the previous level of 14.51, which adds further discomfort for bulls. For bulls to regain a sense of comfort, the fear index would need to fall to around the 12-13 zone.

10) Long Build-up (2 Stocks)

A long build-up was seen in 2 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (116 Stocks)

116 stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding.

12) Short Build-up (106 Stocks)

106 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions.

13) Short-Covering (3 Stocks)

3 stocks saw short-covering, meaning a decrease in OI, along with a price increase.

14) High Delivery Trades

Here are the stocks that saw a high share of delivery trades. A high share of delivery reflects investing (as opposed to trading) interest in a stock.