Premarket Capsule | Edition-01

A Comprehensive Analysis of Nifty, Banknifty, and Open Interest

Kaushik Akiwatkar
March 18, 2024

Prep for tomorrow in less than 5 minutes:

1. Analysis of Nifty 50 using Renko charts

2. Analysis of Open Interest

3. Multi OI Analysis

4. FII Activity

5. Breadth Analysis of F&O Basket

6. Sectoral Breadth

Analysis of Nifty using Renko

Nifty 50 (0.15% 1-min TF)

As per our recent newsletter, I expect Nifty range between 21500 and 22500. Short-term support levels are noted at 21870 to 21930. Should the market dip below 21870, it may move towards the lower end of the range at 21500. Trading activity above 21870 suggests a mild bullish to sideways trend.

Open Interest - Nifty 50

Nifty 50 (Open Interest)

Based on Open Interest data, there's notably more Call writing than Put writing. The Put-Call Ratio (PCR) stands at 0.78, signaling a bearish sentiment. The maximum Call writing is at 22500, indicating resistance levels. Short-term support is identified at 22000.

We should look at shorting Call Options when market breaks important levels and further slides down. Going long in Nifty might be risky.

Multi OI Analysis

At 9:30 AM, the At-The-Money (ATM) strike was 22000, and I continued to monitor this strike throughout the day. The top-right chart shows weekly Total Open Interest (TOI), while the bottom-right chart displays monthly TOI. Both TOIs indicate a bearish sentiment currently. Credit spreads based on CE can be observed and traded.

As we progress with the week, I will explain in the Pre-market Capsule, why I use this frame to gauge market sentiments.

FII Activity

	Value	Analysis
Weekly PCR (Nifty)	0.78	Bearish
OI Analysis	22500 CE (Resistance) 22000 PE (Support)	Today we observed majority of writing in CEs. Bearish
FII Cash	-2,051 Crores	Bearish
FII Index FUT	-178.61 Crores	Bearish
FII OPT	Sold 21,801 Qty CEs Sold 55,885 Qty PEs	Net Bullish

Breadth Analysis of F&O Basket

Medium to Short term breadth analysis

The breadth of F&O basket improved today by 5% to 37 from 32. However this is not a significant improvement for us to conclude anything. Overall sentiment remains week.

Sectoral Breadth

Sectoral Breadth on 1% PnF

Sectors including PSE, Realty, Infra, Energy, and Auto are outperforming the benchmark index and are also approaching oversold conditions on 1% PnF breadth. Should the market see a bounce from current levels, these sectors might be the first to rally. However, given the current weak market sentiments, it's prudent to watch for underperforming sectors that are nearing overbought conditions for a better risk-reward opportunity. Currently, there are no sectors underperforming while also approaching the overbought zone, leaving us as trader and investor in a wait-and-watch mode.

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