Market Outlook Ahead of the May 22 Open: Key Developments to Watch

Nifty Fails to Sustain Above Key Moving Averages, Traders Remain Cautious

The Nifty 50 index failed to reclaim and sustain above its short-term moving averages, resulting in a decline of 0.08% to 23,655 on May 21. The index erased all its opening gains and closed slightly lower, as bulls were unable to hold the crucial resistance level of 23,800 on a closing basis. This led to the Nifty remaining below all key moving averages and trading within the 23,300-23,800 range.

The higher lows formation remained intact on the daily chart, indicating that the bulls are still in control. However, a decisive move above the 23,800-23,900 zone is required for further upside towards the 24,000 level. Until then, range-bound trading may continue, with support placed at 23,400. A break below this level may bring bears into action mode, according to experts.

Key Levels for Nifty 50 and Bank Nifty

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Nifty Call Options Data

The maximum Call open interest was seen at the 24,000 strike with 1.28 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 23,800 strike, which saw an addition of 46.97 lakh contracts.

Nifty Put Options Data

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The 23,000 strike holds the maximum Put open interest with 92.14 lakh contracts, which can act as a key support level for the Nifty in the short term. The maximum Put writing was placed at the 22,900 strike, which saw an addition of 17.49 lakh contracts.

Bank Nifty Call Options Data

The maximum Call open interest was seen at the 54,000 strike with 12.05 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 54,000 strike, which added 4.77 lakh contracts.

Bank Nifty Put Options Data

The 53,000 strike holds the maximum Put open interest with 8.27 lakh contracts, which can act as a key support level for the index in the short term. The maximum Put writing was placed at the 54,000 strike, which added 1.61 lakh contracts.

Funds Flow and Put-Call Ratio

The Nifty Put-Call ratio (PCR) fell to 1.00 on May 21, from 1.24 compared to the previous session. The increasing PCR indicates selling in Puts is higher than selling in Calls, reflecting a bearish mood in the market.

India VIX

The fear gauge, India VIX, extended its downtrend for the third consecutive session, falling 3.35% to 17.82 and remaining below short- and medium-term moving averages for another session.

F&O Data

A long build-up was seen in 49 stocks, indicating a build-up of long positions. Fifty-six stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding. The F&O ban list includes Kaynes Technology India and SAIL.

Stocks Under F&O Ban

Securities banned under the F&O segment include companies where derivative contracts cross 95% of the market-wide position limit. The stocks added to F&O ban are nil, while Kaynes Technology India and SAIL are retained in the F&O ban list.