Trade Setup for September 21: Top 15 things to know before the opening bell

As long as the Nifty trades below 23,600, consolidation and range-bound movement may continue, with 23,000 emerging as a crucial support level, according to experts who maintain a sell-on-rallies strategy.

The Nifty 50 extended its upward journey for the third straight session, rising 0.33 percent on September 18, but the index is not out of the woods yet and bears continue to largely remain in control. The index is trading below all key moving averages, with all of them trending downward, signalling continued weakness. Elevated oil prices above $100 a barrel and US bond yields above 5 percent are also likely to weigh on sentiment. Therefore, as long as the Nifty trades below 23,600, consolidation and range-bound movement may continue, with 23,000 emerging as a crucial support level, according to experts who maintain a sell-on-rallies strategy.

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

1) Key Levels For The Nifty 50 (23,346)

Resistance based on pivot points: 23,380, 23,404, and 23,443

Support based on pivot points: 23,302, 23,277, and 23,238

Special Formation: The Nifty 50 formed a small-bodied bullish candle with upper and lower shadows on the daily chart, resembling a high-wave candlestick pattern and indicating a lack of clear direction. The broader lower high-lower low formation remains intact, while all key moving averages continued to trend downward. The RSI rose to 33.66 and showed a positive crossover, while weakness in the histogram faded for the third consecutive session, although the MACD remained well below its signal line. All these indicators suggest that the index is witnessing some signs of recovery, but the broader trend remains weak.

2) Key Levels For The Bank Nifty (56,359)

Resistance based on pivot points: 56,472, 56,572, and 56,734

Support based on pivot points: 56,148, 56,048, and 55,886

Resistance based on Fibonacci retracement: 57,285, 59,261

Support based on Fibonacci retracement: 55,749, 55,050

Special Formation: The Bank Nifty rebounded 0.54 percent after a day of correction but still lacked strength, as the index tested the 10-day EMA for another session but failed to close above it in either session. The index formed a bullish candle within the previous day’s range, reflecting range-bound trading despite the positive move. It remained below all key moving averages, with short- and medium-term moving averages continuing to slope downward. The RSI at 42.75 is on the verge of a positive crossover, while the Stochastic RSI maintained its bullish crossover. The MACD remained well below the reference line, although the red histogram bar continued to contract for the third straight session. All these indicators suggest that the index is witnessing some signs of recovery, but the broader trend remains weak and the upside could remain capped.

3) Nifty Call Options Data

According to the weekly options data, the 23,700 strike holds the maximum Call open interest (with 94.95 lakh contracts). This level can act as a key resistance level for the Nifty in the short term. It was followed by the 23,500 strike (92.26 lakh contracts) and 23,400 strike (87.68 lakh contracts).

Maximum Call writing was observed at the 23,400 strike, which saw an addition of 22.45 lakh contracts, followed by the 23,700 and 23,350 strikes, which added 19.34 lakh and 14.73 lakh contracts, respectively. The maximum Call unwinding was seen at the 23,250 strike, which shed 12.72 lakh contracts, followed by the 23,200 and 23,000 strikes, which shed 6.61 lakh and 2.84 lakh contracts, respectively.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 23,300 strike (with 1.26 crore contracts), which can act as a key support level for the Nifty in the short term. It was followed by the 23,000 strike (1.09 crore contracts) and the 23,200 strike (96.01 lakh contracts).

The maximum Put writing was placed at the 23,300 strike, which saw an addition of 58.93 lakh contracts, followed by the 23,350 and 23,250 strikes, which added 35.57 lakh and 18.23 lakh contracts, respectively. The maximum Put unwinding was seen at the 23,050 strike, which shed 2.67 lakh contracts, followed by the 23,700 and 23,650 strikes, which shed 1.71 lakh and 30,810 contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the 58,000 strike holds the maximum Call open interest, with 16.33 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 57,500 strike (14.24 lakh contracts) and the 57,000 strike (10.76 lakh contracts).

Maximum Call writing was observed at the 55,900 strike (with the addition of 17,760 contracts), followed by the 56,800 strike (17,550 contracts) and 57,100 strike (14,430 contracts). The maximum Call unwinding was seen at the 57,500 strike, which shed 7.09 lakh contracts, followed by the 58,000 and 56,100 strikes, which shed 96,630 and 64,410 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 57,500 strike (with 15.08 lakh contracts), which can act as a key level for the index in the short term. This was followed by the 56,000 strike (9.41 lakh contracts) and the 58,000 strike (7.47 lakh contracts).

The maximum Put writing was placed at the 55,500 strike (which added 1.42 lakh contracts), followed by the 56,500 strike (1.03 lakh contracts) and 56,000 strike (1 lakh contracts). The maximum Put unwinding was seen at the 57,500 strike, which shed 72,870 contracts, followed by the 58,000 and 57,800 strikes which shed 13,350 and 4,020 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, jumped to 1.06 on September 18, compared to 0.99 in 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

India VIX, the fear gauge, returned to a comfort zone for the bulls as it fell for the third consecutive session, declining 7.36 percent to 11.38 on Friday and slipping below its short- and medium-term moving averages. Sustaining below the 12 level could keep the bulls in a comfort zone and support greater stability in the market.

10) Long Build-up (64 Stocks)

A long build-up was seen in 64 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (21 Stocks)

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

12) Short Build-up (40 Stocks)

40s stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions.

13) Short-Covering (90 Stocks)

90 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.

15) Stocks Under F&O Ban

Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.

Stocks added to F&O ban: Nil

Stocks retained in F&O ban: Bandhan Bank, Inox Wind, Manappuram Finance, SAIL

Stocks removed from F&O ban: Kaynes Technology India