Nagaraj Shetti of HDFC Securities said if Nifty continues its weakness for the next 1 or 2 sessions, then one may consider the whole setup as a bearish double top formation at 11,760 levels.
The market snapped a four-day winning streak on April 3 with the BSE Sensex closing below the psychological 39,000 levels. Caution ahead of RBI monetary policy on April 4 and Skymet forecast of a below-normal monsoon in 2019 led to the decline.
The selling in the last hour of trade dragged BSE Sensex 179.53 points to 38,877.12. The Nifty 50 failed to hold its all-time high of 11,761 touched earlier in the day and ended down 69.20 points at 11,644, forming 'Bearish Engulfing' pattern on daily charts.
After showing a lacklustre type candle pattern in the last three sessions (negative candle pattern of tri-star doji), Nifty slipped into weakness.
"A long negative candle was formed at the new all-time high of 11,761 levels (just one point higher than the last top of 11760-28th Aug 2018). This candle pattern indicates a formation of Bearish Engulfing at the highs," Nagaraj Shetti – Senior Technical & Derivative Analyst, HDFC Securities told Moneycontrol.
According to him, if Nifty continues its weakness for the next one or two sessions, then one may consider the whole setup as a bearish double top formation at 11,760 levels.
"The short term trend of Nifty is weak and one may expect further weakness in the next session. Immediate supports to be watched at 11,550 levels," he said.
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.
The broader markets also caught in a bear trap with the Nifty Midcap and Smallcap indices falling 1 percent each amid weak breadth. About two shares declined for every share rising on the NSE.
All sectoral indices closed in the red with Pharma (down 1.25 percent) and PSU Bank (2.72 percent) losing most.
We have collated top 15 data points to help you spot profitable trades:
Key support and resistance level for Nifty
The Nifty closed at 11,643.95 on April 3. According to the Pivot charts, the key support level is placed at 11,595.13, followed by 11,546.27. If the index starts moving upward, key resistance levels to watch out are 11,726.93 and 11,809.87.
The Nifty Bank index closed at 30,093.30, down 260.95 points on April 3. The important Pivot level, which will act as crucial support for the index, is placed at 29,885.46, followed by 29,677.63. On the upside, key resistance levels are placed at 30,451.86, followed by 30,810.43.
Call options data
Maximum Call open interest (OI) of 23.58 lakh contracts was seen at the 12,000 strike price. This will act as a crucial resistance level for the April series.
This was followed by 11,800 strike price, which now holds 16.53 lakh contracts in open interest, and 11,900, which has accumulated 11.42 lakh contracts in open interest.
Significant Call writing was seen at the 11,900 strike price, which added 2.88 lakh contracts, followed by 11,800 strike that added 1.34 lakh contracts.
Call unwinding was seen at the strike price of 11,600 that shed 3.90 lakh contracts.
Put options data
Maximum Put open interest of 21.25 lakh contracts was seen at 11,500 strike price. This will act as a crucial support level for April series.
This was followed by 11,200 strike price, which now holds 15.69 lakh contracts in open interest, and 11,100 strike price, which has now accumulated 13.59 lakh contracts in open interest.
Put writing was seen at the strike price of 11,700, which added 2.9 lakh contracts, followed by 11,500 strike that added 1.95 lakh contracts and 11,400 strike that added 1.81 lakh contracts.
Put unwinding was seen at the strike price of 11,100, which shed 0.95 lakh contracts, followed by 12,000 strike which shed 0.89 lakh contracts and 11,600 strike that shed 0.55 lakh contracts.
FII & DII data
Foreign Institutional Investors (FIIs) sold shares worth Rs 1,040.48 crore and Domestic Institutional Investors (DIIs) sold Rs 80.83 crore worth of shares in the Indian equity market on April 3, as per provisional data available on the NSE.
Fund Flow Picture
Stocks with a high delivery percentage
High delivery percentage suggests investors are accepting the delivery of the stock, which means that investors are bullish on it.
27 Stocks saw a long buildup
17 stocks saw short covering
A decrease in open interest along with an increase in price mostly indicates short covering.
80 stocks saw a short build-up
An increase in open interest along with a decrease in price mostly indicates a build-up of short positions.
73 stocks saw long unwinding
Bulk Deals on April 3
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Analyst or Board Meet/Briefings
Motherson Sumi Systems: Board meeting is scheduled on May 27 to consider Q4 and FY19 results and to recommend dividend, if any.
Neuland Laboratories: Board meeting is scheduled on May 16 to consider Q4 and FY19 results.
Firstsource Solutions: Board meeting is scheduled on May 6 to consider Q4 and FY19 results.
Tata Coffee: Board meeting is scheduled on April 19 to consider Q4 and FY19 results and to recommend dividend, if any.
Tata Elxsi: Board meeting is scheduled on April 24 to consider Q4 and FY19 results and to recommend dividend, if any.
JSW Steel: Board meeting is scheduled on April 24 to consider Q4 and FY19 results and to recommend dividend.
Bal Pharma: Board meeting is scheduled on May 29 to consider Q4 and FY19 results and to recommend dividend, if any.
Endurance Technologies: Board meeting is scheduled on May 14 to consider Q4 and FY19 results.
Mukand: Board meeting is scheduled on May 20 to consider Q4 and FY19 results.
GVK Power: Board meeting is scheduled on May 24 to consider Q4 and FY19 results.
Finolex Industries: Company's officials will meet Emkay Global Financial Services on April 4.
Stocks in news
Bank, Realty, Auto stocks in focus: RBI will announce monetary policy committee decision on April 4
Coffee Day Enterprises: Company to invest Rs 26 crore in Coffee Day Consultancy Services.
Coastal Corporation: Company settled case with SEBI.
Ajanta Pharma: Dr Anil Kumar resigned as Independent Director of the company.
Indo Rama Synthetics (India): Company allotted 8.3 crore shares by way of preferential issue on private placement basis, aggregating amount Rs 298.8 crore to Indorama Netherlands BV.
SKF India: Prasad R Menon has tendered his resignation as a Director.
KPI Global Infrastructure: Company received order of 720KW solar power plant under Captive Power Producer (CPP).
Bombay Wire Ropes: Board appointed Dilip S More as Chief Financial Officer.
Suven Life Sciences: Company secured product patents in Israel, Japan, New Zealand and Sri Lanka.
Jet Airways: Company defers March salaries to all employees - CNBC-TV18 Sources
Shriram Transport Finance: Board approves raising up to $2 billion via global MTNs and $750 million via overseas debt.
Four stocks under ban period on NSE
Securities in ban period for the next day's trade under the F&O segment include companies in which the security has crossed 95 percent of the market-wide position limit.For April 4, Adani Power, IDBI Bank, Jet Airways and Reliance Power are present in this list.