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

February 11, 2008: The Sensex dropped 4.57 percent within a day, as the Index shed 796.43 points. The benchmark Index fell 833 points, or 4.78 percent and closed at 16,630 on growing global worries over slowing economic expansion. The reasons cited for this fall were weak global markets and disappointing corporate earnings.

The Nifty closed marginally in red on Thursday and made a ‘Hanging Man’ kind of patterns on the daily candlestick charts. A Hanging Man is a bearish reversal candlestick pattern that is formed at the end of an uptrend.

However, investors should wait for confirmation. The uptrend still remains intact as long as Nifty holds above 9,150 levels on closing basis, suggest experts. Investors can carry forward their long positions with a stop loss below 9,156.

We have collated top ten data points on how to help you in spotting profitable trade:

Key Support & Resistance Level for Nifty:

The Nifty50 bounced back from its 5-DEMA placed at 9,223.83. According to Pivot charts, the key support level for Nifty50 is placed at 9,231, followed by 9,200 and 9,182. If the index starts to move higher then key resistance levels to watch out are 9,280, followed by 9,298, and 9,329.

Nifty Bank:

Nifty Bank closed 29 points lower or 0.14 percent at 21,622. Important Pivot level which will act as crucial support for the index is placed at 21,516, followed by 21,410, and 21,331. On the upside, the key resistance level is 21,701, followed by 21,780 and 21,886.

Call Options Data:

On the options front, maximum Call open interest (OI) of 45 lakh contracts stands at strike price 9,500 which will act as a crucial resistance level for the index, followed by 9,300 which now holds 35 lakh contracts in open interest and 9,400 which has accumulated 34 lakh contracts in OI.

Call Writing was seen at strike prices 9,300 (4.6 lakh contracts added), followed by 9,500 (1.4 lakh contracts added). Call unwinding was seen at strike prices 9,200 (0.7 lakh contracts were shed), followed by 9,000 (0.2 lakh contracts shed), and 8,900 (0.5 lakh contracts were shed).

Put Options Data:

Maximum Put OI of 58 lakh contracts was seen at strike price 9,000 which will act as a crucial base for the index in April series followed by 9,100 which has accumulated 47 lakh contracts in open interest, and 9,200 which now holds 37 lakh contracts in open interest.

Put writing was seen at strike prices 8,900 (0.2 lakh contracts added), followed by 8,800 (0.9 lakh contracts added), 8,500 (1.6 lakh contracts added), and 9,000 (0.7 lakh contracts added).

“We have seen fresh Put writing at strike price 9,100 and 9,200 which is supporting the market on the declines while intact Call writing at strike price 9,300 is restricting its upside momentum,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“It requires follow-up buying at higher levels with unwinding in strike price 9,300 Call to extend its positive move in coming sessions,” he said.

FII & DII Data: 

The foreign institutional investors (FIIs) bought shares worth Rs 143 crore compared to domestic institutional investors who sold Rs 206 crore in Indian equity market.

Stocks with high Delivery%:

High delivery percentage suggests that investors are accepting the delivery of the stock which means that investors are bullish on the stock.

33 stocks saw Long Buildup:

41 stocks saw short covering:

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

44 stocks saw Long Unwinding: 

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

72 stocks saw Short Buildup:

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