Trade Setup for April 7: Key Market Indicators Amid Iran-US Ceasefire Developments

Nifty 50 Extends Gains, Closes Above Previous Swing High

The Nifty 50 continued its upward trajectory for the third consecutive session, closing above the previous swing high with a gain of over 1 percent on April 6. Market participants remained focused on developments related to a possible US–Iran ceasefire, which contributed to the index's upward momentum.

However, despite the improvement in momentum indicators, including a climb above the 10-day EMA for the first time since February 23, the elevated India VIX and crude oil prices raised concerns about the sustainability of the uptrend. The Nifty 50's ability to maintain this upward trajectory over the next few sessions will depend on its ability to surpass and sustain above the 23,400–23,500 zone for further rally.

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The Nifty 50 formed a bullish candle with a lower shadow on the daily charts for the second straight session, indicating an improvement in momentum. However, other key moving averages (20-, 50-, 100-, and 200-day EMAs) continued to trend downward, and volumes were lower than in the previous session. Momentum indicators also showed improvement but need to align further with the rally.

Bank Nifty Shows Healthy Improvement

The Nifty Bank also showed healthy improvement, forming a green candle with a lower shadow on the daily timeframe and filling the bearish gap of March 30, indicating improving short-term momentum. The index climbed slightly above the 10-day EMA but remained well below all other key moving averages. The RSI moved above the 40 zone and sustained above the signal line, while the Stochastic RSI showed a bullish crossover.

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Options Data

The 23,500 strike holds the maximum Call open interest (with 75.39 lakh contracts) for the Nifty, which can act as a key resistance level for the index in the short term. The maximum Call writing was observed at the 23,600 strike, which saw an addition of 21.63 lakh contracts.

On the Put side, the maximum Put open interest was seen at the 22,500 strike (with 89.28 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 22,500 strike, which saw an addition of 47.91 lakh contracts.

Funds Flow and Put-Call Ratio

The Nifty Put-Call ratio (PCR) jumped to 1.22 on April 6, compared to a 1.09 in the previous session. The increasing PCR indicates a firming up of a bullish sentiment in the market.

India VIX

The India VIX declined marginally by 0.21 percent to 25.47 on Monday but remained above the 25 zone as well as above all key moving averages, signaling continued concern for bulls.

Long and Short Positions

A long build-up was seen in 53 stocks, indicating an increase in open interest (OI) and price. 2 stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding. 17 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions.

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. Sammaan Capital was added to the F&O ban list.