Premarket Capsule | Edition-02

Analysis of Nifty using Renko

As per our recent newsletter, I expect Nifty range between 21500 and 22500. Short-term support levels are breached and Nifty closed at 21813. We are likely heading towards touching the lower range of 21500 discussed in the weekly newsletter. At the current juncture Nifty may consolidate for few trading hours. The view remains bearish to sideways. Selling CE at every bounce tomorrow will be a good trade setup. If you are trading based on Point & Figure charts, look for Bull-traps of HPs on 1% (1-min) Option charts

Open Interest - Nifty 50

Based on Open Interest data, there's notably more Call writing than Put writing. The Put-Call Ratio (PCR) stands at 0.54, signaling a bearish sentiment. The maximum Call writing is at 22000, indicating resistance levels. Couldn’t find short-term support based on OI data.

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

The top-left chart shows weekly Total Open Interest (TOI), while the bottom-left 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

Breadth Analysis of F&O Basket

The breadth of F&O basket declined today by 10% to 27 from 37. Overall sentiment remains week. There is still some scope of decline in breadth in this week. Be causes of building new shorts in the market.

Sectoral Breadth

Nifty 50 Breadth is 28%, getting into oversold zone. Majority of the sector are turning bearish from price chart. Any bounce in the market will be for sell.