Chart:
NIFTY formed a small bearish engulfing candle, while BANKNIFTY showed a bearish Marubozu, filling a gap. Neither indicates a clear short as both are resting on potential support zones.
Option Chain:
Massive call writing is observed, making the call side heavier than the put side. Heavy call writing above 25,100 establishes this level and above as significant resistance.
PCR (Put/Call Ratio):
The PCR near ATM is 0.74, and overall it is 0.9. This reflects a neutral to weak sentiment, as the higher overall PCR is likely influenced by put writing at lower strikes from the previous week, rather than current strength.
Participant Option Data:
- FIIs and Pros both sold calls and bought puts, indicating a bearish bias in their recent option activity.
- Clients bought calls and sold puts, suggesting a bullish stance.
- Overall, FII net positions are bearish, while Pros still hold a slight long bias despite recent selling. Clients are net short calls and puts, showing a mixed yet overall bearish sentiment from their side.
Participant Futures Data:
FIIs are net short in futures, while clients are net long. Pros are also short, and DIIs are slightly long. No clear large directional bets were observed from FII/DII in futures today.
Participant Stock Data:
FIIs bought approximately 2,300 crores in the cash market. This cash buying offers a glimmer of risk-on sentiment, contradicting some of the bearish option and futures data.
Verdict:
The market presents a mixed and uncertain outlook. While bearish candlestick patterns are forming at support levels, the overall market structure above the breakout zone suggests a potential for consolidation. The key will be the 25,100 NIFTY level.
Trades (Not a Recommendation):
Consider a bear call spread if NIFTY breaks decisively below 25,100. If 25,100 holds and a clear bullish pattern emerges at the support, a bull put spread might be considered.
⚠️ Note: This is not a buy/sell recommendation. Just a market observation to consider risk/reward dynamics.
Conclusion:
Today’s analysis reveals a market at a crucial juncture, with bearish chart patterns contradicting underlying support levels and mixed participant data. The 25,100 level in NIFTY is paramount; its breach could signal a slide, while holding it may lead to consolidation or further upside within the broader channel. The unexpected rate cut by the RBI, despite strong GDP numbers, adds another layer of intrigue, suggesting deeper economic considerations that the market might be factoring in. We are currently in a “wait and watch” mode, with a slight bearish bias in the short-term, but strong support keeping deeper slides at bay for now.