Nifty 50 Shows Signs of Recovery Ahead of October 27 Expiry
The Nifty 50 index rebounds slightly, but market caution prevails as derivatives expiry approaches and oil prices remain high.
Nifty 50 rebounds 0.68% after a previous decline of 2.36%.
Resistance levels at 22,800–22,850 and support at 22,500–22,400 identified.
Put-Call ratio rises to 1.11, indicating bullish sentiment in the market.
On October 26, the Nifty 50 index experienced a modest recovery, gaining 0.68% following a significant correction of 2.36% the previous week. Despite this rebound, market analysts express caution due to the upcoming monthly derivatives expiry on October 27 and the persistent rise in crude oil prices, which have surpassed $100 per barrel. The index is anticipated to fluctuate within the range of 22,200 to 23,200 until it decisively breaks through either boundary to establish a clearer trend direction.
The Nifty 50's recent performance reflects a long bullish candle formation, indicating buying interest at lower levels. However, the index remains below all key moving averages, suggesting a weak broader technical structure. The Relative Strength Index (RSI) has increased to 46.08, indicating a slight improvement in momentum, while the Moving Average Convergence Divergence (MACD) remains above the reference line, though its histogram shows a contraction for the fourth consecutive session, hinting at a loss of upward momentum.
In terms of options data, the 23,000 strike holds the highest Call open interest, indicating a potential resistance level for the Nifty in the short term. The maximum Call writing was noted at the 23,100 strike, with significant additions at lower strikes as well. Conversely, the maximum Put open interest is concentrated at the 22,500 strike, which serves as a key support level. The Put-Call ratio has risen to 1.11, suggesting that traders are increasingly favoring Put options, reflecting a bullish sentiment in the market.
The India VIX, a measure of expected market volatility, has also increased, closing at 17.16, its highest level since May 22. This rise in volatility indicates growing caution among market participants, which could challenge bullish sentiment. A total of 74 stocks showed a long build-up, while 16 stocks experienced long unwinding, signaling mixed market dynamics.
Looking ahead, traders will closely monitor the Nifty's performance as it approaches the derivatives expiry. The upcoming trading sessions will be crucial in determining whether the index can maintain its recovery momentum or if it will face further challenges due to external market pressures, particularly from oil prices and overall market volatility.
