Key Support Breach: Nifty has broken out of the immediate consolidative band between 23000 & 23400. The dismissal of the crucial support level around 23,000 has opened the door for bears to push Nifty towards the 22,500 zone.
Weakness in Midcaps Signals Broader Vulnerability: Persistent selling pressure in mid and small-cap stocks highlights a weak undertone. Nearly 80% of NSE200 stocks are now trading below their 200-day EMA, emphasizing the deteriorating market structure.
Limited Upside Potential: Weak follow-through buying and resistance at higher levels indicate a capped upside, making bearish strategies more favorable in the current setup.
Open Interest: Significant OI observed at 23000 Call and 22500 Put levels, indicating key trading zones. The Put-Call Ratio (PCR) for the 30th January 2025 series stands at 0.67, reflecting a negative built-up.
Defined Risk Strategy: A bearish put spread using 22800PE (Long) and 22500PE (Short) strikes provides a cost-effective, limited-risk approach to profit from further downside while mitigating exposure to extreme market volatility.
Disclaimer: Views expressed by Sahaj Agrawal, Senior Vice President, Head of Derivatives Research, Kotak Securities
 "Nifty Jan expiry strategy: Kotak Securities recommends a Bear Put Spread")
