Moneycontrol
Dec 07, 2017 07:37 PM IST | Source: Moneycontrol.com

Trade setup for Friday: Top 10 things you should know before Opening Bell

Traders can ride the rally as long as Nifty holds above 10,000-10030 levels on closing basis with a stop below 10,033 levels. Following the breakout, the index moved above its crucial resistance level placed at 100-DMA, and 5-DEMA.

Uttaresh Venkateshwaran @UttareshV

The wait for a pullback rally is finally over as bulls remained in control of D-Street throughout the trading session on Thursday and made a strong bull candle, which also resembles a bullish belt hold kind of pattern on the daily candlestick charts.

A bullish belt hold pattern is formed when the opening price becomes the lowest point of the day and is significantly lower than the closing price.

The index witnesses buying momentum throughout the trading sessions, which results in a long white candlestick with a short upper shadow. A bullish belt hold often signals a reversal in investor sentiment.

The Nifty, which opened with a gap on the higher side, rose to an intraday high of 10,182. It slipped marginally to 10,061 in morning trade but bulls pulled the index to 10,150 levels. The index rose 122 points during the day to close at 10,166.

Formation of a bullish candle after 7 consecutive days of the bearish candle would have come as a pleasant surprise for the bulls. Technically, if we look the previous corrections of August and September, the correction did not last for more than eight sessions.

The 50-stock index did witness a breakout after a falling from 10,400 to 10,034 levels in the previous trading session but the market might not be out of the woods. The index was already in an oversold position and a technical bounce was on the cards, experts suggested.

Traders can ride the rally as long as Nifty holds above 10,000-10,030 levels on closing basis with a stop below the 10,033 level. Following the breakout, the index moved above its crucial resistance level placed at 100-DMA, and 5-DEMA.

“The Nifty50 moved in line with our expectations as it registered a robust bull candle with a gain of more than 100 points suggesting that the index has kicked in next leg of upmove. However, it will be too early to conclude that correction has ended at a recent low of 10,033 unless Nifty50 get past 10,410 levels in next 6 trading sessions,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“In that scenario, we can easily conclude with a higher degree of confidence level that correction has ended and then Nifty50 is heading for new lifetime highs,” he said.

Mohammad further added that as of now, trade is clearly in favour of bulls and one can ride this rally for initial target placed in the zone of 10,330 – 10,398 levels. Suggested stop for this trade should be placed below 10,033.

India VIX fell down by 5.42 percent at 14.27. The decline in VIX from higher levels has given relief to bulls and market recovered smartly from lower zones.

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

Key Support & Resistance Level for Nifty

The Nifty closed at 10,166.7 on Thursday. According to Pivot charts, the key support level is placed at 10,091.5, followed by 10,016.3. If the index starts to move higher, key resistance levels to watch out are 10,212.3 and 10,257.9.

Nifty Bank

The Nifty Bank closed at 25,057.2. Important Pivot level, which will act as crucial support for the index, is placed at 24,922.54, followed by 24,787.87. On the upside, key resistance levels are 25,144.64, followed by 25,232.07.

Call Options Data

Maximum Call open interest (OI) of 61.71 lakh contracts stands at strike price 10,500, which will act as a crucial resistance level for the index in the December series, followed by 10,400, which now holds 55.96 lakh contracts in open interest, and 10,300, which has accumulated 44.77 lakh contracts in OI.

Call writing was seen at strike prices of 10,400 (2.84 lakh contracts were added), followed by 10,700 (0.62 lakh contracts added).

Call unwinding was seen at strike price 10,200, which shed 6.49 lakh contracts, followed by 10,500, which saw shedding of 5.16 lakh contracts and 10,300, which shed 4.21 lakh contracts.

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Put Options Data

Maximum Put OI of 86.94 lakh contracts was seen at strike price 10,000, which will act as a crucial base for the index in December series, followed by 9,800, which now holds 49.88 lakh contracts and 10,100 which has now accumulated 40.07 lakh contracts in open interest.

Put writing was seen at strike prices 10,000 (6.38 lakh contracts added) and 10,100, which saw the addition of 2.98 lakh contracts and 9,700, which saw the addition of 2.49 lakh contracts.

Meanwhile, Put Unwinding seen at the strike price of 10,300, which saw shedding of 0.75 lakh contracts, followed by 10,200, which saw 0.7 lakh contracts.

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FII & DII Data

Foreign institutional investors (FIIs) sold shares worth Rs 1,075.62 crore, while domestic institutional investors bought shares worth Rs 926.68 crore in the Indian equity market.

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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137 stocks saw long build-up

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59 stocks saw short covering

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

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14 stocks saw short build-up

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

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2 stocks saw long unwinding

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

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