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Trade setup for Monday: Top 10 things you should know before Opening Bell

17 December, 2017 2:37 PM
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Trade setup for Monday: Top 10 things you should know before Opening Bell

The Nifty, which opened with a gap on the higher side, failed to hold on to gains and closed marginally below its opening level making a ‘Spinning Top’ kind of pattern on the daily charts on Friday.

Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.

The index opened with a 100-point gap on the higher side but came under selling pressure near 10,350-10400 levels. Now, all eyes are on Monday when the Gujarat Assembly elections results will be announced.

If the index manages to hold above 10,350 on closing basis then chances of the rally to continue till 10,409 and 10490 is possible. If the index fails slips below 10140 in the next couple of trading sessions then further slide towards 10,000 looks possible.

The Nifty which opened at 10,345 rose to an intraday high of 10,373. It slipped to an intraday low of 10319 before closing the day 81 points higher at 10,333.

“The Nifty index failed to hold its half of the gains and corrected by around 50 points from higher levels. It formed a Spinning Top candle on the Daily chart and closed near to its supply trend line by connecting recent swing highs of 10490 and 10409,� Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“It has been moving in a falling wedge from last eight weeks and a decisive hold above 10330 could take it towards 10409 then life high of 10490 levels. While on the downside now supports are shifting higher at 10250 then 10200 zones," he said.

The Nifty closed at 10,333.2 on Friday. According to Pivot charts, the key support level is placed at 10,310.9, followed by 10,288.6. If the index starts to move higher, key resistance levels to watch out are 10,364.3 and 10,395.4.

The Nifty Bank closed at 25,440.3. Important Pivot level, which will act as crucial support for the index, is placed at 25,381.29, followed by 25,322.3. On the upside, key resistance levels are 25,529.2, followed by 25,618.1.

Maximum call open interest (OI) of 72.88 lakh contracts stood at a strike price of 10,500, which will act as a crucial resistance level for the index in the December series, followed by 10,400, which now holds 51.95 lakh contracts in open interest, and 10,600, which has accumulated 44.41 lakh contracts in OI.

Call writing was seen at strike prices of 10,700 (4.91 lakh contracts were added), followed by 10,800 (which added 3.78 lakh contracts), and 10,500, (which added 3.3 lakh contracts).

Call unwinding was seen at a strike price of 10,300, which shed 6.25 lakh contracts, followed by 10,200, which shed 3.67 lakh contracts and 10,100, which saw shedding of 1.56 lakh contracts.

Maximum put OI of 96.29 lakh contracts was seen at a strike price of 10,000, which will act as a crucial base for the index in December series; followed by 9,800, which now holds 53.37 lakh contracts and 10,200, which has now accumulated 51.56 lakh contracts in open interest.

Put writing was seen at strike prices of 10,300 (13.17 lakh contracts added), 10,200, which saw the addition of 11.10 lakh contracts and 10,400, which saw the addition of 3.59 lakh contracts.

Put unwinding was seen at strike prices of 9,900, which shed 3.15 lakh contracts, along with 10,100, which shed 2.21 lakh contracts.

Foreign institutional investors (FIIs) sold shares worth Rs 921.03 crore, while domestic institutional investors (DIIs) bought shares worth Rs 635.44 crore in the Indian equity market on Friday, as per provisional data available on the NSE.

High delivery percentage suggests that investors are accepting 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.

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

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


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