Trade Setup for April 20: Key Developments to Watch Ahead of the Open Amid Ongoing Tensions Over the Strait of Hormuz

Nifty 50 Bounces Back, but Faces Crucial Hurdle

The Nifty 50 index bounced back with 0.65 percent gains on April 17, amidst rising hopes of a potential US-Iran deal. However, the index was unable to close above the previous day's high of 24,400, a level that remains a crucial hurdle and corresponds to the upper range of the large bearish gap from March 9. For a further upward journey towards 24,700-24,800, the index must deliver a convincing and sustained close above 24,400.

Support and Resistance Levels

The key levels for the Nifty 50 are as follows:

| | Resistance | Support | | --- | --- | --- | | Pivot Points | 24,379, 24,444, 24,550 | 24,169, 24,103, 23,998 | | Fibonacci Retracement | - | - |

Bullish Momentum

The Nifty 50 has formed a bullish candle alongside the previous session's red candle, indicating a strong uptrend in the market with minimal corrections in between. The index has stayed above the 50-day EMA (near 24,200) for the third consecutive session and also closed above the 50 percent Fibonacci retracement level (of the major correction from the February high to the April low - 24,270). Additionally, the index has sustained well above the 10- and 20-day EMAs, both of which are trending upward. The RSI climbed to 57.11, while the MACD, with a bullish crossover, moved closer to the zero line with a rising histogram. All this indicates positive momentum and strengthens the bullish outlook.

Bank Nifty Performance

The Bank Nifty also witnessed a formation similar to the Nifty 50 on the daily timeframe, while trading in the range of 56,830-55,800 over the last three sessions, which is crucial for determining further direction. The index has been holding above the 50 percent Fibonacci retracement level (of the fall from the February high to the April low at 55,800) for three consecutive days. Additionally, the bullish gap of 55,752-56,109 formed on April 15 remains unfilled. The index closed above the 50-day EMA but has been facing resistance at the 200-day EMA (56,690) for the last three sessions, while remaining well above short-term moving averages that continue to trend upward. The RSI rose to 56.05, while the MACD, with a positive crossover, moved toward the zero line with a healthy green histogram bar. All this indicates strengthening bullish momentum, though some resistance persists near higher levels.

Options Data

The Nifty 50 Call options data shows that the 25,000 strike holds the maximum Call open interest, with 1.14 crore contracts. This level can act as a key resistance level for the Nifty in the short term. The maximum Call writing was observed at the 25,000 strike, which saw an addition of 16.56 lakh contracts, followed by the 25,050 and 24,600 strikes, which added 16.33 lakh and 12.06 lakh contracts, respectively.

The Nifty 50 Put options data shows that the maximum Put open interest was seen at the 24,000 strike, with 76.31 lakh contracts. This can act as a key support level for the Nifty in the short term. The maximum Put writing was placed at the 24,000 strike, which saw an addition of 34.64 lakh contracts, followed by the 24,300 and 24,200 strikes, which added 25.48 lakh and 20 lakh contracts, respectively.

Bank Nifty Options Data

The Bank Nifty Call options data shows that the 58,000 strike holds the maximum Call open interest, with 8.16 lakh contracts. This can act as a key resistance level for the index in the short term. The maximum Call writing was observed at the 56,500 strike, which saw an addition of 49,500 contracts, followed by the 57,600 strike and 58,000 strike.

The Bank Nifty Put options data shows that the maximum Put open interest was seen at the 56,000 strike, with 6.31 lakh contracts. This can act as a key support level for the index. The maximum Put writing was placed at the 56,500 strike, which added 1.49 lakh contracts.

Funds Flow and Put-Call Ratio

The Nifty Put-Call ratio (PCR) rose to 1.09 on April 17, compared to a 0.98 previous session. The increasing PCR indicates the firming up of a bullish sentiment in the market.

India VIX

The India VIX extended its decline for the third consecutive session and moved below both short-term and medium-term moving averages. It fell 4.87 percent to 17.2 on Friday, declined 8.73 percent for the week, and is down over 38 percent for the current month, signalling increasing comfort for bulls.

Stocks with High Delivery Trades

A high share of delivery reflects investing (as opposed to trading) interest in a stock. The following stocks saw a high share of delivery trades:

• [list of stocks]

Stocks Under F&O Ban

Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit. The following stocks are currently under the F&O ban:

• SAIL
• Sammaan Capital