Investors are advised to stay cautious but do not sell this market now and wait for some more confirmations.
The Nifty rallied for the 9th consecutive day in a row on Tuesday but the index failed to close above 10550 levels. It formed a ‘Hanging Man’ kind of pattern for the second time in the last four trading sessions which suggests caution.
The index registered a Hanging Man kind of pattern on 11th April and it recorded a similar pattern on Tuesday. A hanging man is a bearish candlestick pattern that gets usually formed at the end of an uptrend.
It is formed when bears take control at the beginning of the session but then buyers or the bulls were able to push the index near the opening levels towards the end of the session. The large selloff at the beginning of the markets could be seen as an indication that bulls might be losing control.
The Nifty which opened at 10557 slipped to an intraday low of 10495. It bounced back to hit its intraday high of 10560 before closing 20 points higher at 10,548.
Investors are advised to stay cautious but do not sell this market now and wait for some more confirmations. But, the recent price trend suggests that the momentum may be fading. Investors who are long can keep a stop loss below 10379.
“Bulls appear to be just dragging on their feet as Nifty registered a ‘Hanging Man’ kind of formation on candlestick charts suggesting exhaustion of momentum. Interestingly, this kind of pattern is emerging close to its critical resistance zone placed around 10600 levels after 9 consecutive positive closes,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Albeit there are no sell signals on short-term charts, some sort of consolidation or running correction can’t be ruled out in next couple of trading sessions as indices reaching overbought zones. Hence, it looks prudent for short-term traders to book profits and wait for either correction or a breakout above 10630 levels,” he said.
Mohammad further added that the trend will not favour bears unless Nifty closes below 10379 levels whereas a close above 10630 shall extend the current swing towards 10900 kinds of levels. Hence, as of now, any dip towards 10400 is looking like a buying opportunity.
On the options front, maximum Put OI was seen at 10400 followed by 10300 strikes while maximum Call OI was seen at 10700 followed by 10500 strikes.
Significant Put writing at 10500 and 10550 strikes which is shifting its support to higher side while minor Call Writing is seen at 10600 followed by 10700 strikes.
“Option band suggests an immediate trading range in between 10480 to 10650 zones. Nifty index formed a Hanging Man Candle on the daily scale which implies follow up buying is missing at higher levels,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities, told Moneycontrol.
“However it continued its higher highs formation from last twelve consecutive trading sessions which indicates that bulls are still holding the momentum in the market,” he said.
Taparia further added that till Nifty holds above 10480 it could extend its gains towards 10580 and then 10630 levels while on the downside supports are seen at 10480 then 10440 levels.
We have collated the top 15 data points to help you spot profitable trades:
Key support and resistance level for Nifty
The Nifty closed at 10,548.7 on Tuesday. According to Pivot charts, the key support level is placed at 10,509.43, followed by 10,470.17. If the index starts moving upwards, key resistance levels to watch out are 10,574.23 and 10,599.77.
The Nifty Bank index closed at 25,334.4. The important Pivot level, which will act as crucial support for the index, is placed at 25,238.07, followed by 25,141.73. On the upside, key resistance levels are placed at 25,416.67, followed by 25,498.93.
Call Options data
In terms of open interest, the 10,700, call option has seen the most call writing so far at 46.30 lakh contracts. This could act as a crucial resistance level for the index in the April series.
The second-highest buildup has taken place in the 10,500 Call option, which has seen 38.78 lakh contracts getting written so far. The 11,000 Call option has accumulated 34.80 lakh contracts.
Call writing was seen at the strike price of 10,600, which added 2.80 lakh contracts, followed by 10,700, which added 2.14 lakh contracts.
Call unwinding was seen at the strike price of 10,400, which shed 4.55 lakh contracts, followed by 11,000, which shed 1.17 lakh contracts.
Put Options data
Maximum open interest in put options was seen at a strike price of 10,400, in which 52.66 lakh contracts been added till date. This could be a crucial resistance level for the index in April series.
The 10,300 put option comes next, having added 49.64 lakh contracts so far, and the 10,000 put option, which has now accumulated 43.46 lakh contracts.
During the session, put writing was seen the most at a strike price of 10,500, with 5.63 lakh contracts being added, followed by 10,600, which added 1.42 lakh contracts.
Put unwinding was seen at the strike price of 10,300, which shed 5.81 lakh contracts, followed by 10,200, which shed 3.38 lakh contracts, and 10,100, which shed 3.2 lakh contracts.
FII & DII data:
Foreign institutional investors (FIIs) sold shares worth Rs 951.39 crore, while domestic institutional investors bought shares worth Rs 723.81 crore in the Indian equity market, as per provisional data available on the NSE.
Fund flow picture:
Stocks with high delivery percentage:
High delivery percentage suggests that investors are accepting delivery of the stock, which means that investors are bullish on it.
58 stocks saw long buildup
27 stocks saw short covering:
A decrease in open interest along with an increase in price mostly indicates short covering.
75 stocks saw short build-up:
An increase in open interest along with a decrease in price mostly indicates build-up of short positions.
42 stocks saw long unwinding
Kwality Limited: U A Enterprises Private Limited sold 12,00,000 shares at Rs 59.06 per share
GSS Infotech Limited: Real Marketing Pvt Ltd bought 5,77,704 shares at Rs 63.48 per share
Sumeet Ind Limited: BP Fintrade Private Limited sold 6,89,242 shares at Rs 16.85 per share
(For more bulk deals click here)
Analyst or Board Meet/Briefings:
Bhansali Engineering: Prabhudas Lilladher is meeting the management on April 18, 2018.
Advanced Enzymes: First State Investment Management met the management of the firm on April 17, 2018.
Stocks in news:
Indian Hume Pipe: It has bagged order of Rs 108.19 crore from Narmada Water Resources, Water Supply & Kalpsar Dept, Gujarat.
Future Retail allotted Rs 300 crore of NCD on private placement basis
Indian Hotels: Company enters Saudi with first Taj hotel in Makkah
NHPC: Company's 50 MW solar project synced with grid, Hindu Business Line reported.
China’s Fosun enters race to buy Fortis Healthcare
5paisa Capital Q4FY18 results YoY; reported loss of Rs 6 crore versus Rs 3 crore; revenue at Rs 7.87 crore versus Rs 4.60 crore
Tata Sponge Q4FY18 results YoY; net sales up 45.7 percent at Rs 243.5 crore versus Rs 167.17 crore; operating profit up 139 percent at Rs 61.6 crore versus Rs 25.82 crore; margins at 25.3 percent versus 13.95 percent; profit up 120 percent at Rs 46.7 crore versus Rs 21.2 crore
Dalmia Bharat alleges information leakage in Binani Cement bidding process: BS
Hindustan Zinc plans to produce 1000 tonnes of silver in next 3-4 years: BS
United Spirits moves HC alleging that government outlets in Chattisgarh are not buying their products and are trying to drive them out: Media Report
Filatex India board meeting on May 7 to consider stock split and Q4 results
Virinchi signs multi-product 5-year contract with Advance America Inc for its flagship management software QFund
Andhra Bank says exposure to SSK Trading of Rs 30 crore was classified NPA in June 2014: Reuters
HAL enhanced jet production capacity: BQ
Indian Hotel enters into Saudi Arabia with 340 keys properties in Makkan
Blue Star launched 100 products during summers and target to have Rs 1,700 crore revenue from ACs
Future Consumer increased stake to 99.93 percent in Integrated Food Park, company's subsidiary, acquired the stake from Capital Foods pvt ltd
Hotel Leelaventure notified exchange about default in payment of interest and principal of debentures
Lupin: Company receives tentative US FDA approval for generic AndroGel.
AstraZeneca: Company to invest USD 90 million over the next five years in India.
Ashiana Housing - CARE reaffirmed the issuer rating at A
Oberoi Realty board meeting on April 24 to consider dividend for FY17-18, Q4FY18 Results; also to consider fund raising via NCD/QIP
Sequent Scientific's subsidiary acquired Bremer Pharma GMBH at Enterprise value of Euro 22,63,431
KP Energy has fixed record date for bonus shares as April 27O
Omaxe to incorporate wholly owned subsidiary Company as Omaxe New Faridabad Developers Pvt Ltd
Cadila Healthcare has divested its entire shareholding in Bremer Pharma GmbH, wholly owned subsidiary of company
Fortis Healthcare confirmed that company has availed a secured financing facility upto Rs 160 crore from RattanIndia Finance Pvt Ltd
Andhra Bank: Exposure to SSK Trading of Rs 30 crore is non performing asset, Bloomberg reported.
Jagran Prakashan: Company to consider share buyback on April 27.
Vedanta: Company's resolution plan for Electrosteel Steels approved by NCLT.
Shalby: Company signs memorandum of understanding with Sen Sok International University Hospital, Cambodia
4 stocks under ban period on NSE
Security in ban period for the next day's trade under the F&O segment includes companies in which the security has crossed 95 percent of the market-wide position limit.
For April 18, 2018 stocks such as IRB Infra, JP Associates, Reliance Communications, and TV18 Broadcast are present in this list.(Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd and publishes Moneycontrol.com)