Moneycontrol
Sep 17, 2017 06:12 PM IST | Source: Moneycontrol.com

Trade Setup for Monday: Top 10 things you should know before Opening Bell

It looks like bulls are awaiting fresh signals but uncertainty around the global front is not giving enough conviction to bulls to take charge of D-Street, suggest experts.

Uttaresh Venkateshwaran @UttareshV

The Nifty closed flat with a slight negative bias on Friday after North Korea test-fired another missile that flew over Japan’s northern Hokkaido far out into the Pacific Ocean. The index closed flat as traders preferred to stay on the sidelines ahead of the weekend. The index made an indecisive pattern, ‘Spinning Top’ kind of pattern for the third consecutive day in a row.

A Spinning Top candle is often regarded as a neutral pattern which suggests indecisiveness among both bulls as well as bears. When a Spinning Top is formed in an uptrend, the one we are in right now, it suggests that the bulls are losing conviction and a possible top could be in place, but it will still require confirmation.

“The markets again rallied intraday to come in touching distance with all-time highs, the initial gap down was largely attributed to Geopolitical tensions around North Korea,” Nikhil Kamath, Co-founder & Head of Trading, Zerodha told Moneycontrol.

“News of Aircel bankruptcy around closing again drove the markets slightly lower. We continue to hold a short-term bearish and a long-term bullish strategy on the markets. We would advise refraining from taking big bets on the long side right now,” he added.

The index witnessed selling pressure soon after it climbed its crucial resistance level of 10,100. The good part is that it closed above its 5-days exponential moving average (DEMA) placed at 10,059.

It looks like bulls are awaiting fresh signals but uncertainty around the global front is not giving enough conviction to bulls to take charge of D-Street, suggest experts. A decisive move above its previous record high of 10,138 is required for the index to breakout.

The Nifty opened at 10,062.35 and dipped slightly towards its intraday low of 10,043.65. It rose to 10,115.15 before closing the day at 10,085.40, down 1.2 points.

“The Nifty continued its range bound move for the third trading day. Traders at this juncture need to be utmost cautious as this rally should perish going forward without adding much value addition to the previous top of 10,137 even if it breaks out,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“We believe that it is in a topping formation and once the signs of reversal get confirmed the subsequent down leg shall drag down the indices towards 9,700 kind of levels,” he said.

Mazhar advises traders to ride their long positions with a stop below 10,000 on a closing basis and make use of this rally if any to exit their long positions even on strength beyond 10,137 levels.

We have collated the top ten data points to help you spot profitable trade:

Key Support & Resistance Level for Nifty:

The Nifty closed at 10,085.4 on Monday amid volatile times in D-Street following North Korea’s missile launch. According to Pivot charts, the key support level for Nifty is placed at 10,047.67, followed by 10,009.93. If the index starts to move higher, key resistance levels to watch out are 10,119.17, followed by 10,152.93.

Nifty Bank:

The Nifty Bank closed at 24,844.3 on Friday. The important Pivot level which will act as crucial support for the index is placed at 24,785 followed by 24,725.7. On the upside, the key resistance level is 24,910.2 followed by 24,976.1.

Call Options Data:

Maximum Call open interest (OI) of 48.85 lakh contracts stands at strike price 10,200 which will act as a crucial resistance level for the index in September series, followed by 10,100 which now holds 43.38 lakh contracts in open interest and 10,000 which has accumulated 28.14 lakh contracts in OI.

Call Writing was seen at strike prices 10,200 (5.29 lakh contracts added), followed by 10,500 (2.18 lakh contracts were added) and 10,100, which saw the addition of 2.13 lakh contracts.

Meanwhile, Call unwinding was seen at strike prices 10,300 (3.53 lakh contracts shed), 10,000 (0.74 lakh contracts shed), and 9,900 (0.62 lakh contracts shed).

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Put Options Data:

Maximum Put OI of 64.50 lakh contracts was seen at strike price 9,900 which will act as a crucial base for the index in September series followed by 10,000 which has accumulated 54.76 lakh contracts in open interest, and 9,800 which now holds 45.10 lakh contracts in open interest.

Put Writing was seen at the strike price of 9,900 (5.7 lakh contracts added), followed by 9,800, which saw an addition of 2.22 lakh contracts and 10,300 (1.45 lakh contracts added).

Meanwhile, Put unwinding was seen at strike prices 9,700, which shed 5.83 lakh contracts, followed by 9,500, which saw the shedding of 1.39 lakh contracts and 10,100, which shed 1.28 lakh contracts.

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FII & DII Data:

Foreign institutional investors (FIIs) bought shares worth Rs 418.86 crore, compared to domestic institutional investors (DIIs), who bought shares worth Rs 125.55 crore in the Indian equity market on Friday.

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.

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41 stocks saw Long Buildup:

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32 stocks saw Short Covering:

A decrease in open interest along with an increase in price mostly indicates short covering.

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52 stocks saw Long Unwinding:

Long Unwinding happens when there is a decrease in OI as well as in price.

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87 stocks saw Short Buildup

An increase in open interest along with a decrease in price mostly indicates short positions being built up.

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