Trade Setup: Nifty50 may remain range-bound on monthly F&O expiry day

It was a day of range-bound movement and consolidation for Indian equity markets as Nifty50 stayed in the defined range and ended the day with a minor loss. Nifty50 saw a quiet start to the day; it soon got stronger and went on to mark the high point of the day in the first hour of the trade. Gradually, the headline index pared its morning gains to trade flat around its previous close levels. Thereafter, for the rest of the session, Nifty50 headed nowhere and spent the time in a sideways trajectory. The markets did see some sharp moves on the downside, however, finally, the index ended the day with a minor loss of 19.65 points (-0.11 per cent).

We approach the weekly options expiry; apart from that, we also approach the current month derivative expiry. The weekly options show some clear behavior of the market participants. Wednesday saw heavy Call writing of over 3 million shares at 17300 strikes. This means that for any meaningful extension of the up move, moving past 17300 will be very important. Not only this, this level is likely to offer strong resistance to Nifty50 on the monthly expiry day. On the lower side, maximum Put OI is seen at 17000 levels. This means that the markets may stay largely in a broad trading range on the expiry day.

A tepid start is expected on Thursday. Nifty50 is expected to see stiff resistance at 17300 and 17345 levels. The supports come in at 17150 and 17065 levels.


The Relative Strength Index (RSI) is at 49.27; it remains neutral and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line.

Nifty50 formed a spinning top candle on the daily chart. This kind of candle denotes the indecisive behavior of the market participants.

Apart from some minor intraday spikes, Nifty50 did not show any directional bias throughout the day. The session is likely to stay dominated by rollover-centric activities. It is also likely that the markets may continue to stay highly stock-specific in nature and we will not see any specific sector dominating the session. However, in any case, it is recommended to keep exposures at modest levels and limited to low beta and defensive stocks. A cautiously positive approach is advised for the day.

(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based at Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)