Trade Setup for Wednesday: 10 things to know before the opening bell

The Nifty closed at a record high on Monday at 9,237 and it looks like the market could have made an intermediate top as suggested by the formation of ‘hanging man’ type of pattern on charts in the previous trading session.

The index may trade sideways on Wednesday ahead of the Reserve Bank of India’s policy review which will be out on Thursday. Market participants are expecting a status-quo stance this time from RBI but the commentary on rate cuts will give direction to markets.

“This rally may get a further fillip if RBI succeeds in meeting the expectations of market participants. In such a scenario, we can expect Nifty to target 9,350 kind of levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told moneycontrol.

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

The Nifty closed above its crucial 5-DEMA and 10-DEMA placed at 9,174 and 9,137 respectively. According to Pivot charts, the key support level for Nifty is placed at 9,205, followed by 9,172 and 9,152. If the index starts to move higher then key resistance levels to watch out are 9,258, followed by 9,278, and 9,310.

Nifty Bank closed 103 points higher or 0.48 per cent at 21,547. Important Pivot level which will act as crucial support for the index is placed at 21,449, followed by 21,350, and 21,292. On the upside, the key resistance level is 21,605, followed by 21,664 and 22,762.

“Bank Nifty formed a bullish dragon fly doji on the daily charts and has been holding the gains with sustain buying interest. It has shifted its support at 21,250 while having the potential to move towards 21,700 and 22,000 zones,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told moneycontrol.

On the options front, maximum Call open interest (OI) of 38 lakh contracts stands at strike price 9,500 which will act as a crucial resistance level for the index, followed by 9,400 which now holds 31 lakh contracts in open interest and 9,200 which has accumulated 28 lakh contracts in OI.

Call Writing was seen at strike prices 9,300 (3.8 lakh contracts added), followed by 9,400 (8.1 lakh contracts added), and 9,500 (7.5 lakh contracts added). Call unwinding was seen at strike prices 9,200 (5.1 lakh contracts were shed).

“A shift in highest Call congestion from strike prices 9,200 to 9,500 and 9,400 have given fresh hope to the market participants to ride the rally,” said Taparia.

Maximum Put OI of 49 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 33 lakh contracts in open interest, and 9,200 which now holds 31 lakh contracts in open interest.

Put writing was seen at strike prices 8,900 (2.6 lakh contracts added), followed by 9,000 (12 lakh contracts added), 9,100 (10 lakh contracts added), and 9,200 (9.4 lakh contracts added).

The foreign institutional investors (FIIs) sold shares worth Rs 534 crore compared to domestic institutional investors who bought Rs 33 crore in Indian equity market.

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

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

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

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