Trade setup for Thursday: Top 10 things you should know before Opening Bell
India VIX moved up by 5.58 percent at 11.73. The market witnessed a sudden spike in volatility as index broke above its higher lows after the seven trading sessions
Bulls failed to keep the momentum going as Nifty came under pressure as soon as it came close to its crucial resistance level of 10,080 and made a ‘Bearish Engulfing Pattern’ on the daily candlestick charts on Wednesday.
The index wiped out gains made in the previous session but managed to close above its crucial short-term moving averages such as 5-days exponential moving average (DEMA), 50-DEMA, 10-DEMA, 13 and 50-DEMA.
Nifty index failed to continue its formation of higher lows and corrected by around 100 points from its intraday high levels to 9,950. The bears might try and regains their foothold on D-Street if Nifty closes below 9,950 levels.
A Bearish Engulfing Pattern consists of two candles. One candle is usually a small candle which is followed by a large black or red candlestick pattern that engulfs the short one or the previous candle.
A bearish candlestick pattern suggests that bears were able to regain control after the index moved in a narrow range for the past few sessions. It is usually seen as the end of an uptrend but if index breaks below its crucial support level of 9,950, selling pressure could accelerate.
The Nifty opened at 10,042.60 and made a high of 10,067.25 which resulted in small upper shadow. It pared gains and corrected below 9,900 to record its intraday low of 9,984.80 which resulted in small lower shadow.
“The Nifty registered a Bearish Engulfing Formation in line with our projections as it reversed the course from the right technical resistance point placed around 10,080 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.
“In next trading session if the indices trade below 9,955-levels for at least one hour then selling pressure shall build up thereby marking the end of pullback attempt from the lows of 9,687 and traders should prepare to see deep cuts towards the levels of 9,863 to 9,760, going forward,” he said.
Mohammad further added that traders are advised to shift focus on stock-specific activity and can consider short positions in the index, below 9,955 levels, with a stop of 10,090 for the targets placed around 9,850.
India VIX moved up by 5.58 percent at 11.73. The market witnessed a sudden spike in volatility as index broke above its higher lows after the seven trading sessions.
We have collated the top ten data points to help you spot profitable trade.
Key Support & Resistance Level for Nifty
The Nifty closed at 9,984.8 on Wednesday. According to Pivot charts, the key support level is placed at 9,938.0, followed by 9,891.2. If the index starts to move higher, key resistance levels to watch out are 10,049.4 and 10,114.
The Nifty Bank closed at 24,107.4. Important Pivot level, which will act as crucial support for the index, is placed at 23,954.33, followed by 23,801.27. On the upside, key resistance levels are 24,360.33, followed by 24,439.73.
Call Options Data:
Maximum Call open interest (OI) of 50.66 lakh contracts stands at strike price 10,000, which will act as a crucial resistance level for the index in the October series, followed by 10,100, which now holds 48.83 lakh contracts in open interest, and 10,200, which has accumulated 34.41 lakh contracts in OI.
Call writing was seen at strike prices 10,100 (8.7 lakh contracts were added), followed by 10,000 (5.13 lakh contracts added), and 10,200 which added 3.1 lakh contracts.
Call unwinding was seen at strike price 9,900, which shed 1.67 lakh contracts, followed by 9,800, which shed 0.81 lakh contracts and 10,400, which shed 0.24 lakh contracts.
Put Options Data
Maximum Put OI of 54.45 lakh contracts was seen at strike price 9,800, which will act as a crucial base for the index in October series, followed by 10,000, which now holds 53.66 lakh contracts and 9,900, which has now accumulated 53.64 lakh contracts in open interest.
Put writing was seen at strike prices 10,000 (8.92 lakh contracts added), followed by 10,100 (4.09 lakh contracts added) and 9,500 which saw an addition of 1.86 lakh contracts.
Put Unwinding was seen at strike prices 9,800 (3.89 lakh contracts shed), followed by 9,700 (3.65 lakh contracts shed), and 9,900 (2.99 lakh contracts shed).
FII & DII Data
Foreign institutional investors (FIIs) sold shares worth Rs 107.95 crore, while domestic institutional investors bought shares worth Rs 233.8 crore in the Indian equity market on Wednesday.
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.
13 stocks saw long build-up
23 stocks saw short covering
A decrease in open interest along with an increase in price mostly indicates short covering.
83 stocks saw short build-up
An increase in open interest along with a decrease in price mostly indicates short positions being built up.
94 stocks saw long unwinding
Long Unwinding happens when there is a decrease in OI as well as in price.