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Nifty 50 (22,097) and Bank Nifty (46,864) wrapped up last week with minor gains of 0.3 per cent and 0.6 per cent respectively. Below is an analysis of derivatives data of both indices.
Nifty 50
Nifty futures (April contract) was up 0.2 per cent last week as it ended at 22,335 on Friday. While the futures contracts made small gains, there was not much movement in the cumulative Open Interest (OI), on a weekly basis.
The movement in futures price and OI over the past week shows that there was a short build-up in the first half. In the second half, the bears made an exit, which was captured by a decline in OI towards the end of the week.
Nevertheless, the chart of Nifty April futures denotes that there is a resistance between 22,360 and 22,400. A breakout of 22,400 can lift the contract to 22,520, another barrier. Subsequent resistance is at 22,650.
The nearest support for Nifty futures (April) from the current level is at 22,170, followed by 21,980. Note that there is a good chance for the contract to oscillate within 21,980 and 22,400 in the near term. We can predict the next leg of trend based on the direction of the break of the 21,980-22,400 range.
According to the March expiry options chain, support levels are at 22,000 and 21,800. Similarly, the immediate resistance points are at 22,500 and 22,800.
Since Nifty futures is trading near a resistance, traders can consider futures short or put option longs. Exit these positions when the contract touches 22,000. On the other hand, if Nifty futures break out of 22,400, exit the futures short and put longs, and consider initiating fresh futures long and call option longs.
Bank Nifty
Bank Nifty futures (April series) (47,324) reflected a similar behaviour to Nifty futures – the contract witnessed arrival of fresh shorts until Wednesday last week and then exit of the same towards the end of the week. That said, Bank Nifty futures outperformed Nifty futures by gaining 0.6 per cent.
Another similarity is that Bank Nifty futures is now hovering around a resistance at 47,500. If this level is breached, the contract can move towards the next resistance at 48,000. Subsequent barrier is at 48,600.
On the other hand, Bank Nifty futures has a support at 46,850 and 46,450. Below this, the nearest demand levels are at 46,150 and 45,600. The next swing in price will depend on which direction the contract moves out of the 46,450-47,500 price band.
As per the option chain, 46,500 and 46,000 are the key supports. At the other end, the potential barriers are at 47,500 and 48,000.
Participants can consider futures short or put longs now since Bank Nifty futures is trading near a resistance at 47,500. But if this is invalidated, liquidate futures short and put longs and then go for futures long or call longs.
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