Trade setup for Thursday: On May 24, the Indian stock market experienced a correction, with the BSE Sensex falling 208 points to 61,774 and the Nifty50 dropping 63 points to 18,285. This decline occurred due to weak global cues and ahead of the expiry of monthly futures and options contracts on Thursday.
Technical analysis suggests that despite the recent selling pressure, the Nifty remains in an uptrend. Subash Gangandharan, Senior Technical and Derivative Analyst at HDFC Securities, expects the uptrend to continue with an immediate upside target of 18,459 once the resistance level of 18,420 is breached. The longer time frame also indicates that the Nifty is likely to surpass the immediate target in the coming sessions. However, a crucial support level to watch for weakness is at 18,250.
The Bank Nifty, on the other hand, fell more than the Nifty50, declining 277 points to 43,678. The Relative Strength Index (RSI) is in a bearish crossover, indicating a negative sentiment. Rupak De, Senior Technical at LKP Securities, stated that a fall below 43,500 may trigger further correction in the Bank Nifty. Resistance levels are located at 43,700 and 44,000, where Call writers have positioned themselves.
In terms of options data, the maximum Call open interest (OI) was observed at the 18,400 strike for the Nifty, followed by the 18,500 and 18,300 strikes. Call writing was seen at the 18,300 and 18,400 strikes, while Call unwinding occurred at the 18,700, 18,800, and 19,100 strikes.
For Put options, the maximum Put OI was at the 18,200 strike, followed by the 18,300 and 18,100 strikes. Put writing was observed at the 18,200, 18,100, and 17,800 strikes, while Put unwinding occurred at the 17,900, 18,400, and 18,000 strikes.
In terms of stock movement, Larsen & Toubro, InterGlobe Aviation, Abbott India, Nestle India, and TCS saw high delivery percentages, indicating investor interest. There were 29 stocks with long build-up in open interest, including ONGC, Biocon, Power Finance Corporation, Manappuram Finance, and Petronet LNG. On the other hand, 55 stocks saw long unwinding, while 45 stocks saw short build-up and 60 stocks witnessed short-covering.
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