Moneycontrol
Dec 06, 2017 08:20 PM IST | Source: Moneycontrol.com

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

Both MACD as well as Supertrend indicators are in ‘sell’ mode and if Nifty breaks below 10,030 then decline towards 9,850 is possible, suggest experts.

Uttaresh Venkateshwaran @UttareshV

The Nifty, which was reeling under pressure, extended the decline soon after the Reserve Bank of India (RBI) kept its key lending rate — the repo rate— unchanged at 6 percent on Wednesday, but warned about lurking inflation worries in the New Year.

The index formed a bearish candle on Wednesday and breached its 100-day simple moving average placed at 10,071. The index took support at its 100-days exponential moving average placed around 10,038 which also forms a crucial support in days to come.

Formation of a bearish candle after a Doji pattern clearly gives an advantage to the bears but a small technical bounce back could be on the cards as Indian markets are trading near key support levels after seven straight sessions of bearish candles.

Both MACD as well as Supertrend indicators are in ‘sell’ mode and if Nifty breaks below 10,030 then decline towards 9,850 is possible, suggest experts.

The Nifty opened at 10,088 and rose to an intraday high of 10,104 but then bears took control of the index and pushed the index below 1oo-SMA to touch its intraday low of 10,033. Nifty finally closed 74 points lower at 10,044.

“The Nifty continued its slide before registering a bearish candle as selling got accelerated especially after RBI policy meets,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“However, as pointed out in our last update, in these columns, crucial support of 10,030 is still intact and as long as that support doesn’t get breached on the closing basis, a window of opportunity shall remain open for bulls to make a comeback,” he said.

Mohammad further added that a relief rally and a confirmation in that regard shall come if Nifty closes above 10,050 in the immediate trading session. Contrary to this, any breach of said support level shall initially drag down the indices towards 9,850 levels.

The Nifty breached its crucial 100-days moving average after two months as selling pressure weighed on investor sentiments after RBI maintained the status quo.

The Nifty continued the selling spree for the seventh consecutive session in a row. The index also closed below 10,100 which was being sustained in last three days.

“Initial supports which were last hope for bulls placed at 10,100-10,090 levels has also been breached coupled with 10,071 which was 100 Days SMA. In a continuous downward trend, we are seeing selling pressure on any marginal bounce and is being aggressively utilised by bulls,” Mustafa Nadeem, CEO of Epic Research, told Moneycontrol.

“In the short-term, a bounce towards 10,200 - 10,180 is being observed as resistance while support may be seen at 9,980 - 9,950. Technically price structure also suggests a bearish sentiment is prevailing with a recent low around 10030 being a lower bottom,” he said.

Mustafa further added that a breach of previous swing low which was formed in November around 10,100 may also act as a resistance.

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

Key Support & Resistance Level for Nifty

The Nifty closed at 10,044.1 on Wednesday. According to Pivot charts, the key support level is placed at 10,016.87, followed by 9,989.63. If the index starts to move higher, key resistance levels to watch out are 10,087.77 and 10,131.43.

Nifty Bank

The Nifty Bank closed at 24,851.8. Important Pivot level, which will act as crucial support for the index, is placed at 24,751.13, followed by 24,650.46. On the upside, key resistance levels are 25,014.93, followed by 25,178.07.

Call Options Data

Maximum Call open interest (OI) of 67.36 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 53.23 lakh contracts in open interest, and 10,300, which has accumulated 50.44 lakh contracts in OI.

Call writing was seen at strike prices of 10,100 (8.55 lakh contracts were added), followed by 10,200 (7.93 lakh contracts added), and 10,400 which added 7.13 lakh contracts.

Call unwinding was seen at strike price 10,000, which shed 0.81 lakh contracts.

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Put Options Data

Maximum Put OI of 83.49 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 50.35 lakh contracts and 10,100 which has now accumulated 37.87 lakh contracts in open interest.

Put writing was seen at strike prices 9,800 (5.30 lakh contracts added) and 10,000, which saw the addition of 3.06 lakh contracts and 10,100, which saw the addition of 2. 74 lakh contracts.

Meanwhile, Put Unwinding seen at the strike price of 10,200, which saw shedding of 2.05 lakh contracts, followed by 10,400, which saw 1.24 lakh contracts.

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FII & DII Data

Foreign institutional investors (FIIs) sold shares worth Rs 1,217.92 crore, while domestic institutional investors bought shares worth Rs 995.11 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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23 stocks saw long build-up

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14 stocks saw short covering

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

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115 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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57 stocks saw long unwinding

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

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