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

The Nifty50 crumbled on Tuesday as it broke below crucial short term support levels and breached key moving averages. The index made a ‘Bearish Belt Hold’ kind of pattern on the daily candlestick charts.

Traders should refrain from creating aggressive fresh short at current levels as the Nifty50 index closed just below its crucial support level of 50-days exponential moving average (DEMA) and is now stuck in the bear grip.

If the index sustains below 9775 levels then the selling pressure could drag the index towards 9,720 and then towards 9,685 levels suggest experts. But, the index is still respecting to its rising support trend line by connecting the swings lows of 9075, 9448 and 9685 mark.

“The index wiped out all its recovery made in last three sessions and slipped below its 50-DEMA. If formed a Bearish Belt Hold candle on the Daily chart and again got stuck in bear grip after the bounce back moves of last four sessions,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“Now, if it sustains below 9,775 then fresh selling pressure could drag it towards 9,720 and then towards 9,685 while on the upside hurdles are seen at 9,850 and then towards 9,880 zones,” he said.

The Nifty closed 116 points lower or 1.18 percent at 9,796. According to Pivot charts, the key support level for Nifty50 is placed at 9,757, followed by 9,718. If the index starts to move higher then key resistance levels to watch out are 9,861, followed by 9,925.

Nifty Bank closed 248 points lower or 1.02 percent at 24,128 on Tuesday. Important Pivot level which will act as crucial support for the index is placed at 24,047 followed by 23,966. On the upside, the key resistance level is 24,265 followed by 24,401.

Maximum Call open interest (OI) of 59 lakh contracts stands at strike price 9,900 which will act as a crucial resistance level for the index in August series, followed by 10,000 which now holds 57 lakh contracts in open interest and 10,100 which has accumulated 41 lakh contracts in OI.

Call Writing was seen at strike prices 9,800 (22 lakh contracts added), followed by 9,900 (11 lakh contracts were added). Call unwinding was seen at strike prices 10,000 (1.1 lakh contracts shed), 10,100 (5.6 lakh contracts shed), and 10,200 (5.4 lakh contracts shed).

Maximum Put OI of 55 lakh contracts was seen at strike price 9,800 which will act as a crucial base for the index in August series followed by 9,500 which has accumulated 48 lakh contracts in open interest, and 9,700 which now holds 38 lakh contracts in open interest.

There was hardly any Put Writing but unwinding was seen at strike prices 9800 (10 lakh contracts shed), followed by 9900 (23 lakh contracts shed), 10,000 (7.7 lakh contracts shed), and 10,100 (1.5 lakh contracts shed).

The foreign institutional investors (FIIs) sold shares worth Rs1460 crore compared to domestic institutional investors who bought shares worth Rs1391 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.

8 stocks saw Long Buildup:

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

106 stocks saw Long Unwinding:

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

83 stocks saw Short Buildup:

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