"The Bank Nifty closed below the 20-day moving average (48,410) which is a sign of weakness.
According to the pivot point calculator, the Bank Nifty index may see resistance at 48,360, followed by 49,008 and 49,317.
It was followed by the 22,500 strike, which had 90.05 lakh contracts, while the 22,800 strike had 83.12 lakh contracts.
The maximum Call unwinding was visible in the 23,300 strike, which shed 7.35 lakh contracts, followed by 23,100 and 23,200 strikes, which shed 7.09 lakh and 5.53 lakh contracts, respectively.
It was followed by the 21,800 strike, comprising 61.38 lakh contracts and then the 21,500 strike, with 43.93 lakh contracts.
Market Trend
The ongoing consolidation is expected to continue in the coming sessions with immediate support at 22,150, the lower end of rising channel, and key support at 22,000 mark, but in case the Nifty 50 manages to defend 22,300, then 22,400 is likely to be immediate hurdle on the higher side and then 22,500 levels, experts said.
The market participants also need to keep an eye on the rising volatility that put bulls at uncomfortable position, which is not a good sign. India VIX, the fear index, jumped 2.5 percent to 17.01 levels on Tuesday, and surged nearly 67 percent in the last nine consecutive sessions.
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On May 7, the BSE Sensex fell 384 points to 73,512, while the Nifty 50 dropped 140 points to 22,303 and formed long bearish candlestick pattern on the daily charts with a minor lower shadow. This market action indicates an ongoing downward correction in the market.
"We observe overlapping negative candles on the downside in the last couple of sessions as per the daily chart which signals the absence of sharp selling momentum in the market," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
The lower tops and bottoms on the daily chart are intact and the present weakness could be in line with the new higher bottom formation of the pattern. The higher bottom reversal needs to be confirmed with an upside bounce from the lows.
"Immediate resistance is at 22,400 levels and the next lower levels are to be watched around 22,100-22,000," Nagaraj said.
According to Rupak De, senior technical analyst at LKP Securities, further selling pressure is anticipated, possibly extending towards 21,980-22,000 in the short term, as long as it remains below 22,400.
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Here are 15 data points we have collated to help you spot profitable trades
Key support and resistance levels on the Nifty and the Bank Nifty
The pivot point calculator indicates that the Nifty 50 is expected to face resistance at the 22,327 level, followed by 22,510 and 22,612 points. On the lower side, the index may take immediate support at the 22,243 level, followed by 22,179 and 22,078 points.
Meanwhile, the Bank Nifty plummeted 610 points or 1.25 percent to 48,285, extending downward move for fifth consecutive session, and formed long bear candle on the daily charts.
"The Bank Nifty closed below the 20-day moving average (48,410) which is a sign of weakness. We expect correction to continue in Bank Nifty which could lead to a drift towards 47,900 over the next few trading sessions," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.
According to the pivot point calculator, the Bank Nifty index may see resistance at 48,360, followed by 49,008 and 49,317. On the lower side, support is likely at 48,198, followed by 48,007 and 47,698.
Call options data
According to the weekly options data, the maximum Call open interest remained at 23,000 strike, with 1.05 crore contracts. This level can act as a key resistance for the Nifty in the short term. It was followed by the 22,500 strike, which had 90.05 lakh contracts, while the 22,800 strike had 83.12 lakh contracts.
Meaningful Call writing was seen at the 22,400 strike, which saw an addition of 37.46 lakh contracts. It was followed by 22,300 and 22,500 strikes that added 35.24 lakh and 34.16 lakh contracts.
The maximum Call unwinding was visible in the 23,300 strike, which shed 7.35 lakh contracts, followed by 23,100 and 23,200 strikes, which shed 7.09 lakh and 5.53 lakh contracts, respectively.
Put option data
On the Put side, the 22,000 strike continued to have maximum open interest, which can act as a key support level for the Nifty with 67.88 lakh contracts. It was followed by the 21,800 strike, comprising 61.38 lakh contracts and then the 21,500 strike, with 43.93 lakh contracts.
Meaningful Put writing was seen at the 21,800 strike, which saw an addition of 22.22 lakh contracts, followed by 21,700 and 22,300 strikes, with 9.28 lakh and 8 lakh contracts additions, respectively.
Put unwinding was observed at the 22,500 strike, which shed 13.61 lakh contracts. This was followed by 22,400 and 22,600 strikes, with a reduction of 11.04 and 8.1 lakh contracts, respectively.
Stocks with high delivery percentage
A high delivery percentage reflects investor interest in a stock. Bharti Airtel, Atul, Maruti Suzuki, Reliance Industries, and Larsen & Toubro saw the highest delivery among the F&O stocks.
16 stocks see long build-up
A long build-up was seen in 16 stocks, including Godrej Consumer Products, Britannia Industries, United Breweries, Eicher Motors, and Marico. An increase in open interest (OI) and price indicates a build-up of long positions.
84 stocks see long unwinding
Based on the OI percentage, 84 stocks saw long unwinding, which included Godrej Properties, Havells India, Coromandel International, Oracle Financial Services Software, and MCX India. A decline in OI and price indicates long unwinding.
74 stocks see a short build-up
A short build-up was seen in 74 stocks, including Lupin, SRF, Indraprastha Gas, Voltas, and Navin Fluorine International. An increase in OI, along with a fall in price, points to a build-up of short positions.
12 stocks see short-covering
Based on the OI percentage, 12 stocks were on the short-covering list including Hindustan Unilever, Kotak Mahindra Bank, Aditya Birla Fashion & Retail, L&T Technology Services, and TCS. A decrease in OI, along with a price increase, is an indication of short-covering.
Put-Call Ratio
The Nifty Put-Call ratio (PCR), which indicates the mood of the market, dropped further to 0.78 on May 7, from 0.85 levels in the previous session.
The increasing PCR or higher than 0.7 or surpassing 1 means traders are selling more Put options than Calls 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.
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Results on May 8
Larsen & Toubro, Hero MotoCorp, Canara Bank, Tata Power Company, TVS Motor Company, Bajaj Consumer Care, Balaji Amines, Bharat Forge, ESAF Small Finance Bank, Gujarat State Petronet, Home First Finance Company India, India Shelter Finance Corporation, Kalpataru Projects International, and Piramal Enterprises will release March quarter earnings on May 8.
Stocks in the news
Dr Reddy's Laboratories: The pharma company has recorded net profit at Rs 1,307 crore for quarter ended March FY24, growing 36.3 percent over a year-ago period, with other income rising 133 percent YoY to Rs 656 crore. Revenue from operations grew by 12.5 percent on-year to Rs 7,083 crore for the quarter, with global generics business rising 13 percent to Rs 6,119.1 crore.
PB Fintech: The Policybazaar operator has recorded profit at Rs 60.19 crore for the quarter ended March FY24, against loss of Rs 9.34 crore in corresponding period of previous fiscal. Revenue during the quarter grew by 25 percent on-year to Rs 1,090 crore and premium increased by 43 percent to Rs 5,127 crore during the same period.
Pidilite Industries: The adhesive manufacturing company has reported net profit at Rs 304.3 crore for fourth quarter of financial year 2024, growing 6.4 percent over corresponding period of previous fiscal impacted by exceptional loss of Rs 71.7 crore, with strong operating numbers on lower input cost. Revenue from operations grew by 7.9 percent on-year to Rs 2,901.9 crore for the quarter.
JSW Energy: The JSW Group company has recorded consolidated net profit at Rs 345.3 crore for March FY24 quarter, increasing 22.4 percent over the same period previous fiscal despite muted topline, driven by strong operating numbers with lower fuel cost. Revenue from operations grew by 3.2 percent on-year to Rs 2,755.9 crore for the quarter.
Dixon Technologies: Subsidiary, Dixon Electro Appliances has entered into an agreement with Nokia Solutions and Networks OY (Nokia) for development and manufacturing of telecom products.
Funds Flow (Rs crore)
FII and DII data
Foreign institutional investors (FIIs) net sold Rs 3,668.84 crore shares, while domestic institutional investors (DIIs) pumped in Rs 2,304.50 crore on May 7, provisional data from the NSE showed.
Stocks under F&O ban on NSE
The NSE has added Punjab National Bank, and Zee Entertainment Enterprises to the F&O ban list for May 8, while retaining Aditya Birla Fashion & Retail, Balrampur Chini Mills, Biocon, GMR Airports Infrastructure, Vodafone Idea, and SAIL to the said list.
Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.
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