Moneycontrol
Oct 10, 2017 08:43 PM IST | Source: Moneycontrol.com

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

Investors who want to play safe ahead of the earnings season can look at booking partial profits and probably re-entering at lower levels.

The Nifty opened with a gap on the upside but failed to add momentum and closed just above its opening level making a ‘Doji’ kind of candle for the second consecutive day in a row on Tuesday.

A 'Doji' is formed when the index opens and then closes approximately around the same level. However, it remains volatile throughout the trading day which is indicated by its long shadow on either side. The candle appears like a cross or a plus sign.

The Nifty opened at 10,013.70 and closed slightly above that level at 10,016.95, thus forming a Doji pattern. It rose to an intraday high of 10,034 making an upper shadow and fell to an intraday low of 10,002.30 which made the long lower shadow.

A 'Doji' is a neutral chart pattern and hence, investors should not make their trading decision based on today’s chart pattern and wait for a couple of more trading sessions. Investors who are holding long positions can continue to remain long with a stop loss below 10,000 levels.

Investors who want to play safe ahead of the earnings season can look at booking partial profits and probably re-entering at lower levels.

“The Nifty registered a Doji kind of indecisive formation for the second consecutive day in a row. This kind of back to back indecisive patterns can be a harbinger of a big move in either of the directions,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

As none of the technical momentum oscillators generated a sell signal on lower time frame charts there can be some more leg room on the upside.

“Bank Nifty which has underperformed for the last couple of trading sessions is slowly creeping upwards and appears to have registered a breakout,” said Mohammad.

He further added that traders are advised to go for part profit booking around 10,080 levels and continue to hold remaining positions with a stop below 10,000 on a closing basis.

India VIX moved down by 2.45 percent at 11.11 and overall lower volatility suggests a buy on decline sentiment.

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

Key Support & Resistance Level for Nifty

The Nifty closed at 10,017.0 on Tuesday. According to Pivot charts, the key support level is placed at 10,001.53, followed by 9,986.07. If the index starts to move higher, key resistance levels to watch out are 10,033.23 and 10,049.47.

Nifty Bank

The Nifty Bank closed at 24,347.4. Important Pivot level, which will act as crucial support for the index, is placed at 24,287.46, followed by 24,227.53. On the upside, key resistance levels are 24,393.57, followed by 24,439.73.

Call Options Data:

Maximum Call open interest (OI) of 45.96 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 40.51 lakh contracts in open interest, and 9,900, which has accumulated 31.64 lakh contracts in OI.

Call writing was seen at strike prices 10,000 (2.31 lakh contracts were added), followed by 10,300 (2.13 lakh contracts added), and 10,100 which added 2.02 lakh contracts.

Call unwinding was seen at strike price 9,900, which shed 1.84 lakh contracts, followed by 9,800, which shed 1.48 lakh contracts and 9,700, which shed 0.44 lakh contracts.

Image1

Put Options Data

Maximum Put OI of 58.36 lakh contracts was seen at strike price 9,800, which will act as a crucial base for the index in October series, followed by 9,900, which now holds 56.90 lakh contracts and 10,000, which has now accumulated 44.98 lakh contracts in open interest.

Put writing was seen at strike prices 10,000 (6.28 lakh contracts added), followed by 9,900 (4.88 lakh contracts added) and 10,100 which saw an addition of 1.19 lakh contracts.

Put Unwinding was seen at strike prices 10,500 (0.68 lakh contracts shed), followed by 9,700 (0.66 lakh contracts shed), and 10,300 (0.58 lakh contracts shed).

Image2

FII & DII Data

Foreign institutional investors (FIIs) sold shares worth Rs 504.82 crore, while domestic institutional investors bought shares worth Rs 402.15 crore in the Indian equity market on Tuesday.

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.

Image3

125 stocks saw long build-up

Image4

19 stocks saw short covering

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

Image5

63 stocks saw short build-up

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

Image6

8 stocks saw long unwinding

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

Image7
Sections
Follow us on
Available On