Gift Nifty is showing a gap down of 18 points at 6:30 AM this morning. Dow closed higher by 10 points and Nasdaq closed higher by 14 points in yesterday's trade. This morning, Asian markets are trading flat with Nikkei 225 down by 72 points and Kospi down by 45 points. At present, Dow futures are trading higher by 36 points and Nasdaq futures are up by 39 points. Taking cues from Gift Nifty, Nifty50 will open slightly gap down or flat at around yesterday's close. Though FIIs have a net buy amount in the cash market yesterday, much should not be read into this. Of the total block deal of Bharti Airtel, FIIs have bought ₹ 51.31 billion worth of shares in this block deal. Excluding this, FIIs are still net sellers.

Despite the positive close on Monday, momentum was missing from the markets from the opening trades itself. The data suggests consolidation with a bearish tone. The range for Nifty50 will be between 22800 and 23000; for Nifty Bank, it would be between 48500 and 49000. Implied Voltatility also remains more or less the same at 15.67 and still remains over the comfortable level of 15. Today, the level to watch will be 23900. At any convincing break of this level, Nifty50 can once again dip to 23800 to 23786 levels, which is also the level for 23900 put writers. Any move for Nifty50 above 23050 can trigger a short covering to take Nifty50 up to the 10 DEMA placed at 23124. At 22900, the bears and bulls are jostling for resistance and support. Any increase in the put side on the 22900 level will give support to the market, and conversely, any increase in the Open Interest on the call side will extend the resistance to Nifty50. The entire bias of FIIs is bearish. Level 22786 has already been tested multiple times and seems to be holding and is a strong demand zone, which indicates a bottom for Nifty50 at least for this weekly expiry. Any rise in the markets is an opportunity to sell where the rally fails. It still remains a sell-on-rise market. Tomorrow is the weekly expiry of Nifty50, and the market will be positioning for the same in the second half of the day. Expect a range-bound consolidation for tomorrow.

Nifty Bank has not been able to break the range. FIIs are bearish on Bank Nifty. The conviction of put writers on 49000 is still there but is not as strong as it was on Monday. A watch will have to be kept on this level. The difference between the number of calls and puts has decreased to 63000 in favour of put options. Any increase in calls will push Nifty Bank downwards, and the next small support is at 48500, with strong support at 48000. The 10 DEMA placed at 49407 and 20 DEMA placed at 49483 are still a resistance. With 1.197 million puts, 49000 is the support, although weak, and with 1.058 million calls, 49500 and with 1.440 million calls, 50000 is the resistance. One should wait and watch the price action in Nifty Bank at the 10 and 20 DEMA. If the rally fails at these levels, then a sell-on-rise market continues. If Nifty Bank stays above 49000, then wait for the rally to fail to sell on rise. If Nifty Bank slips below 49000, then there is no meaningful support nearby and should be left alone.

Yesterday
Spot
Nifty50 opened with a slight gap up of 4 points at 22963, while Nifty Bank opened with a gap down of 47 points at 49211. However, this initial movement didn't translate into sustained momentum.

The bullish momentum from the previous day failed to continue. Instead, selling pressure dominated the early trading, pushing Nifty50 down to an intraday low of 22801. This level was close to the lower range of 22786 expected by us in Tuesday's report. Nifty50 then found support around 22800, preventing further decline. From there, it gradually recovered to reach an intraday high of 22966 before closing the day at 22945. The 22,800 level has repeatedly acted as a strong demand zone, while 23000 is now acting as a supply zone. The day was characterized by consolidation, a period of relatively sideways movement, and a dull trading session. This lack of strong price movement often leads to a decrease in option premiums, benefiting option sellers. The 22,786 level has been tested five times recently, indicating its significance as a support level. Out of the 50 stocks in the Nifty50, 20 ended the day with gains. 

Nifty Bank followed a similar pattern to the Nifty50. The previous day's bullish momentum didn't continue, and selling pressure in the initial trades drove Nifty Bank to an intraday low of 48814. Tuesday's report had noted strong conviction among put writers at the 49000 level. Put writers are investors who bet that the price of an asset will not fall below a certain level. This conviction likely contributed to the Nifty Bank's rebound to an intraday high of 49150 before it closed at 49087. Only 3 out of the 12 stocks in the Nifty Bank index closed the day with gains.

Other sectorial indices experienced mixed performance. The notable gainers included Nifty IT (+0.95%), Nifty Metal (+0.07%), Nifty Realty (+0.06%), Nifty CPSE (+0.90%), Nifty PSE (+0.25%), and Nifty Oil & Gas (+0.51%). On the other hand, the notable losers were Nifty Midcap100 (-0.20%), Nifty Auto (-0.61%), Nifty Mid Select (-0.32%), Nifty FMCG (-0.88%), Nifty Pharma (+1.27%), Nifty Consumer Durables (+0.82%), and Nifty Small Cap 100 (+0.04%).

Options
Nifty50 (Expiry February 20)
Aggressive call writing was seen at every level from 22900 to 23500. Similar put writing was not observed, indicating bearish sentiment. The option chain was lopsided in favour of call writers. The conviction of put writers has been dented again, suggesting less confidence in upward movement. Call writers rolled down the calls from 23300 to 23200, adapting to market conditions. As visible from the bar chart, the difference between calls and puts at 23000 was about 3 million excess calls. This level of 23000 has now become the immediate resistance followed by 23200, which has 8.13 million calls.

The conviction of the put writers seems to be now placed at 22700. Though the conviction of put writers did not waver at the 22800 level, put writers at this level made no addition. With the addition of 2.4 million puts, the total number of puts at 22700 was at 6.2 million, which will form the support for Nifty50. 22900 will be the level to watch out. On the lower side, 22700 gives immediate support. The Put-Call Ratio was 0.8 and could be considered in a neutral zone, suggesting a small potential for a bounce. Yet, at the same time, the IV for put was 17.96 and 16.64 for call options. IV being higher on the put side suggests that traders are expect the price going down rather than up. 

Nifty Bank (Expiry February 27)
A lot of call writing happened at every level from 49000 to 50500. Put unwinding was observed at every level from 49300 to 48000, suggesting a bearish outlook. The conviction of the call writers is much more than the put writers. 49000 is the level to watch for. The 1.133 million calls and 1.197 million puts suggest bulls and bears are even at this level. Any increase in the puts here will give support to Nifty Bank, and any increase in calls will provide resistance.

After the 49000 level, there is some support at 48500, but meaningful strong support is seen and visible at 48000. The IV for put side was 18.32 and 18.49 for call options, indicating slightly higher expectations of upward movement. 

Support and Resistance
 - Nifty50: Major support at 22700; major resistance at 23200
 - Nifty Bank: Major support at 49000; major resistance at 50000
 - Sensex:  Yesterday was expiry hence the option chain not properly formed yet.

Put Call Ratio and at-the-money
 - Nifty50: Overall 0.80; ATM 0.81 (bearish)
 - Nifty Bank: Overall 0.7; ATM 0.75 (bearish)
 - Sensex: Yesterday was expiry hence the option chain not properly formed yet. ENDS