Will We Witness Bank Nifty Put Writers Covering Their Shorts Tomorrow? Read On To Know All The Scenarios…
Bank Nifty OHLC on 26 Apr 2022
As mentioned in our view yesterday, Bank Nifty extended it’s pullback rally. Bank nifty opened at 36515.35, just above the second resistance mentioned in our analysis. It remained in a small range and only managed to make a high of 36604.55. Bank nifty clearly struggled to hold above 36500 and eventually moved closer to our support, marking a low of 36265.90.
Bank nifty again moved back into the range but only to witness selling closer to 36500. It has closed below 36500 at 36404.80, which is not that encouraging.
What does Bank Nifty’s EOD Chart tell us?
As mentioned above, a closing below 36500 is not that optimistic. But, we have already concluded yesterday that the upside looked restricted, haven’t we? So, the closing shouldn’t be surprising.
Bank nifty has formed a bearish spinning top candlestick and is still trading below the 21 Day moving average.
RSI and Volume Check
RSI on daily timeframe further improved from 45.77 to 47.05 on bank nifty fut and from 45.77 to 47.73 on spot.
RSI (47.73) < Weekly RSI (48.89) < Monthly RSI (58.63)
Though the RSI has improved a bit, RSI on the daily, weekly and monthly are still below 60.
Following yesterday’s buying, another green Volume bar was formed, with a volume of 3.70M.
Bank Nifty Open Interest (OI)
Calls: The highest OI is at 36500 closely followed by 37000. Huge OI addition and volume is seen at 36500, indicating immediate resistance. The premium of 36500 has not moved by much, from the previous day’s closing.
It looks like there is some short buildup on the call side at higher strikes. 37k looks to be strong resistance for the April month’s expiry.
Resistance Levels: 36500, 36840 (Charts + OI)
Puts: The highest OI on the put side is also seen at 36500 with huge OI and volume, followed by 36000. The put premiums have decreased a lot compared to the calls, suggesting short buildup on the put side.
Support Levels: 36216, 35740, 35400-500, 35000 (Charts + OI)
The option chain is little in favor of bulls with restricted upside of 37000 for this week’s expiry.
Global Markets
- NASDAQ is in deep red, down by -399.02 points or -3.07%
- Dow Futures is down by -1.73% or -589 points while posting this view
- European markets have closed in red
- SGX Nifty is down by -153.50 points or -0.89% while projecting this view
FII, DII, USDINR
- FII bought Rs 237.80 crores in index futures and Rs 9957.95 crores in index options
- USDINR was up down by -0.18% and closed at 76.5775
Conclusion: Looking at Bank Nifty’s EOD closing, chart, RSI and global markets, the pullback rally on bank nifty looks to be over.
The upper limit for bank nifty looks clearly looks restricted near 37k. If there is a big gap down opening, the shorts on the put side may run for cover, which may pull the bank nifty even more lower. 35400-500 and 35000 remain crucial support for the April month expiry. If bank nifty breaks 35k and sustains below it, we may witness bloodbath.
Overall bias is negative for tomorrow i.e 27 April 2022.
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