Trade setup for Friday: Top 10 things you should know before Opening Bell
Bullish momentum will continue once Nifty reclaims Mount 10K. On the other hand, a fall below 9,725 could open doors for another 300 point fall. Trade with caution and strict stop losses.
The Nifty which started with a gap on the lower side went on to test its crucial support placed at 50-days exponential moving average (DEMA) from where it bounced back to close above 9800 on Thursday.
The index formed a bearish candle for the fourth consecutive day in a row and a convincing breach of 50-DMA in the next few sessions could lead to further downside in the markets.
The Nifty opened at 9,872.85 and rose marginally to 9,892.65 but then bears took control of D-Street which pushed the index below its 50-DMA placed at 9,782. The index bounced back from its intraday low before closing 87 points lower at 9,820.
The last minute pull back from crucial support levels suggest that bulls have not given hope on D-Street yet and are eager to bounce back. If global cues remain stable, we could see a slight technical bounce back on Friday.
However, bullish momentum will continue once Nifty reclaims Mount 10K. On the other hand, a fall below 9,725 could open doors for another 300 point fall. Trade with caution and strict stop losses.
One factor which might work against bulls is a ‘SELL’ signal triggered by the Superternd indicator today. Moving average convergence divergence (MACD) which is a trend following momentum indicator gave a sell signal earlier in the week on Monday.
The last time Supertrend indicator gave a SELL signal was in September 2016 when the index was trading around 8800. The index fell nearly 1200 points before the signal reversed its trend and that was in December 2016.
“Bears were on rampage as Nifty corrected around 100 points but soon bulls regained their strength as they successfully defended the 50-days moving average and appears to have saved the day for themselves as they managed to push the prices higher from day’s low,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“As Bank Nifty also recoiled from critical support levels a pullback in next trading session can’t be ruled out in the market. However, major technical set back is likely to develop if Nifty closes below 9725 levels in next trading which may open up the doors for another 300 point fall,” he said.
We have collated top ten data points to help you spot profitable trade.
Key Support & Resistance Level for Nifty:
The Nifty closed at 9,820.25, down 87 points on Thursday. According to Pivot charts, the key support level is placed at 9,766.75, followed by 9,713.25. If the index starts to move higher, key resistance levels to watch out are 9,883.2 and 9,946.15.
Nifty Bank closed 157.25 points lower at 24,217.35 on Thursday. Important Pivot level, which will act as crucial support for the index, is placed at 23,917.37, followed by 23,617.43. On the upside, key resistance level is 24,422.07, followed by 24,626.84.
Call Options Data:
Maximum Call open interest (OI) of 51.92 lakh contracts stands at strike price 10,100, which will act as a crucial resistance level for the index in the August series, followed by 10,000, which now holds 51.16 lakh contracts in open interest, and 10,200, which has accumulated 48.80 lakh contracts in OI.
Call writing was seen at strike prices — 9,900 (11.71 lakh contracts added), followed by 10,000 (10.35 lakh contracts added), and 9,800, which saw the addition of 3.57 lakh contracts.
Meanwhile, Call unwinding was seen at strike prices 10,400 (1.06 lakh contracts were shed), followed by 9,400 (0.06 lakh contracts shed).
Put Options Data:
Maximum Put OI of 46.20 lakh contracts was seen at strike price 9,800, which will act as a crucial base for the index in August series, followed by 9,900, which now holds 37.24 lakh contracts and 9,500, which has now accumulated 36.92 lakh contracts in open interest.
Put writing was seen at strike prices 9,400 (7.27 lakh contracts added), followed by 9,500 (3.7 lakh contracts added) and 9,600, which saw an addition of 3.02 lakh contracts.
Put unwinding was seen at strike prices 10,000 (7.61 lakh contracts shed), followed by 9,700, where 2.64 lakh contracts were shed and 9,800, which saw the shedding of 2.17 lakh contracts.
FII & DII Data:
Foreign institutional investors (FIIs) sold shares worth Rs 1171.21 crore, while domestic institutional investors bought shares worth Rs 821.72 crore in the Indian equity market on Thursday.
Stocks with high delivery percentage:
High delivery percentage suggests that investors are accepting the delivery of the stock which means that investors are bullish on the stock.
3 stocks saw long build-up
17 stocks saw short covering:
A decrease in open interest along with an increase in price mostly indicates short covering.
33 stocks saw short build-up:
An increase in open interest along with a decrease in price mostly indicates short positions being built up.
164 stocks saw long unwinding:
Long Unwinding happens when there is a decrease in OI as well as in price.