After witnessing its sharpest fall in several months on Tuesday, the NIFTY50 is expected to see relatively stable trading on Wednesday as the index managed to hold the crucial 200-day Exponential Moving Average (EMA).

On Tuesday, concerns about the heightened global tensions resulting from a situation resembling a trade war between the United States and the European Union over Greenland had a negative impact on market sentiment. The situation was made worse by the surge in Japanese bond yields, which set off a global market-wide unwinding.On the other hand, the precious metals’ markets, especially gold and silver, climbed higher and hit new all-time highs.

Looking technically, NIFTY50 was not successful in staying above its 20-day and 50-day EMA levels for the last few sessions, which is a sign of weakness in the short term. But on Tuesday, the index was supported at around 25,158, which is near its long-term 200-day EMA. Following the advice from market experts, it will be very crucial for the index to remain above this level on a weekly closing basis in order to maintain the larger bullish pattern intact.

From the perspective of derivatives, options data for the January 27 monthly expiry reveals a strong resistance zone near 25,500, where the highest call open interest has been built.The 25,000 strike price has developed into a major support level that is accompanied by the most significant put open interest and hence has become a crucial psychological level for traders.

In the derivatives market, Bajaj Finance, Adani Enterprises and Eternal were the ones with short build-up, while ICICI Bank and HDFC Bank were among the most active futures contracts. HDFC Bank 920 CE and SBIN 1010 CE were the options that saw the highest trading activity.

The direction for the near term might be indicated by the market players keeping a strict watch on the 200-day EMA and the 25,000 level since global cues are still not clear up to now.

Disclaimer: Trading in derivatives entails a high degree of risk. It is advisable for investors to trade only when they are completely aware of the risks involved and to use the proper risk management methods. The information provided in this article is for informational purposes only and does not imply investment advice.