Gaurav Ratnaparkhi of Sharekhan by BNP Paribas said overall set up shows that the benchmark index is in for a significant correction.
The market fell sharply from intraday high and closed lower on April 8 as a rise in crude oil prices to five-month highs dented traders sentiment. Banking & financials, metals and select auto stocks faced selling pressure while IT outperformed.
The BSE Sensex declined 161.70 points to 38,700.53 and the Nifty 50 slipped 61.50 points to 11,604.50 and formed bearish candle, resembling a 'Bearish Engulfing' kind of formation on daily charts.
"On the daily chart, the Nifty has formed a lower top lower bottom, which signals the beginning of a downtrend as per the Dow Theory. Also, the index has formed an Engulfing Bear candle, which adds to the probability in favour of the bears," Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas told Moneycontrol.
He said overall set up shows that the benchmark index is in for a significant correction. "Initial target area on the downside is at 11,300-11,250. On the flip side, any bounce beyond 11,700 is likely to attract fierce selling," he added.
Shabbir Kayyumi, Head of Technical Research, Narnolia Financial Advisors said as long as the index is trading below Monday's pivot point at 11,650, there is a possibility of Nifty coming down to touch the line of parity placed around 11,540 levels, while an aggressive trade above 11,660 levels will take prices higher towards previous high.
The broader markets also caught in a bear trap as the Nifty Midcap index was down 0.8 percent and Smallcap index fell 0.5 percent.
We have collated 15 data points to help you spot profitable trades:
Key support and resistance level for Nifty
Nifty closed at 11,604.50 on April 8. According to the Pivot charts, the key support level is placed at 11,532.3, followed by 11,460.1. If the index starts moving upward, key resistance levels to watch out are 11,693.5 and 11,782.5.
The Nifty Bank index closed at 29,845.30, down 239.35 points on April 8. The important Pivot level, which will act as crucial support for the index, is placed at 29,630.57, followed by 29,415.83. On the upside, key resistance levels are placed at 30,146.07, followed by 30,446.83.
Call options data
Maximum Call open interest (OI) of 27.82 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 19.19 lakh contracts in open interest, and 11,900, which has accumulated 14.62 lakh contracts in open interest.
Significant Call writing was seen at the 12,000 strike price, which added 4.51 lakh contracts, followed by 11,700 strike that added 2.32 lakh contracts and 12,100 strike that added 0.67 lakh contracts.
Call unwinding was seen at the strike price of 11,900 that shed 0.28 lakh contracts, followed by 11,500 strike that shed 0.24 lakh contracts.
Put options data
Maximum Put open interest of 22.71 lakh contracts was seen at 11,500 strike price. This will act as a crucial support level for the April series.
This was followed by 11,200 strike price, which now holds 17.29 lakh contracts each in open interest and 11,600 strike price, which has now accumulated 15.93 lakh contracts in open interest.
Put writing was seen at the strike price of 11,200, which added 0.39 lakh contracts.
Put unwinding was seen at the strike price of Rs 11,600 strike, which shed 0.97 lakh contracts, followed by 11,700 strike that shed 0.60 lakh contracts and 11,300 strike that shed 0.37 lakh contracts.
FII & DII data
Foreign Institutional Investors (FIIs) bought shares worth Rs 329.6 crore while Domestic Institutional Investors (DIIs) sold Rs 623.81 crore worth of shares in the Indian equity market on April 8, 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.
16 Stocks saw a long buildup
22 stocks saw short covering
A decrease in open interest along with an increase in price mostly indicates short covering.
70 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.
90 stocks saw long unwinding
Bulk Deals on April 8
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Analyst or Board Meet/Briefings
Yes Bank: Bank will consider raising funds via debt, equity, and announce March quarter earnings on April 26.
Rushil Decor: Company's officials will meet investors/analysts on April 9.
Gateway Distriparks: Company's officials will meet Reliance Nippon Life Asset Management on April 9.
Finolex Industries: Company's officials will meet B&K Securities India on April 9.
5paisa Capital: Bank to consider raising funds via NCD and announce March quarter earnings on April 16.
Eris Lifesciences: Company's officials will meet IIFL on April 9.
Stocks in news
Results on April 9: Bajaj Consumer Care, Simplex Projects
Bharti Airtel: SEBI approved company's Rs 25,000 crore fund-raising plan
Voltas: Company signed a pact to sell Shima Seiki's products in India.
Fortis Healthcare: Girish Gupta stepped down as CFO with immediate effect. The company appointed Vivek Kumar Goyal As Chief Financial Officer.
Prabhat Telecoms (India): Company entered into a distributor agreement with 'Xmi Pte Ltd' (Hong Kong) for distributing telecom accessories and other accessories as manufactured products in Delhi and NCR, Rajasthan, Uttar Pradesh, Arunachal Pradesh, Nagaland, Mizoram, Meghalaya, Manipur, Sikkim, Assam, Tripura and West Bengal of the Republic of India to specific retailers on non-exclusive basis.
Karda Constructions: Company commenced construction of Hari Krishna - Phase IV, a residential cum commercial project in Nashik, Maharashtra. The total saleable area will be 60,548.71 square feet and expected sale proceeds should be around Rs 21.19 crore. The said project will be complete by November 2022.
Coffee Day Enterprises: Impact HD Inc (IHD) to invest $15 million for 49 percent stake in the company's subsidiary Coffee Day Consultancy Services Private Limited. After this deal, company and its subsidiary Coffee Day Global will hold 51 percent stake in Coffee Day Consultancy Services Private Limited.
Majesco: Company appointed finance & operations expert Wayne Locke as new CFO.
Asian Paints: Company said a fire broke out at the manufacturing facility in Vishakhapatnam, Andhra Pradesh. Fire will not have any impact on the business operations of the company.
DLF: GIC sold seven crore shares in a block deal at Rs 192 per share - CNBC-TV18 sources. In 2016-17, GIC via property arm had bought seven crore shares in DLF.
Seven 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 9, Adani Power, DLF, IDBI Bank, Jet Airways, PC Jeweller, Reliance Power and Wockhard are present in this list.