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

27 March, 2017 2:34 PM
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Trade setup for Tuesday: Top 10 things you should know before Opening Bell

The Nifty50 succumbed to selling pressure as the index breached its crucial support levels to make a ‘Bearish Belt Hold’ kind of pattern on the daily candlestick charts on Monday.

Traders need to be cautious and refrain from creating long positions as a break below 9,000-8,975 could put further pressure on the bulls.

The only positive takeaway from Monday’s session was a bounce back from the low of 9024 which signifies that bulls are not ready to give up. For bulls to reclaim their lost glory on D-Street, Nifty50 must close above 9,075.

The Nifty50 breached its crucial 13-days EMA placed at 9,051. History suggests that Nifty50 has always managed to bounce back from this level in a day or two. If it fails, then it might be looking at levels below 9,000 in this week, suggest experts.

According to Pivot charts, the key support level for Nifty50 is placed at 9,014, followed by 8,984, and 8,944. If the index starts to move higher then key resistance levels to watch out are 9,085, followed by 9,125, and 9,155.

Nifty Bank closed 65 points lower at 21,056. Important Pivot level which will act as crucial support for the index is 20,964, followed by 20,872, and 20,764. On the upside, key resistance level is 21,164, followed by 21,271 and 21,363.

On the options front, maximum Call open interest (OI) of 69 lakh contracts stands at strike price 9,200 which will act as a crucial resistance level for the index, followed by 9,100 which now holds 56 lakh contracts in open interest and 9,300 which has accumulated 38 lakh contracts in OI. Call Writing was seen at strike price 9000 (4 lakh contracts added), followed by 9,100 (14.8 lakh contracts), and 9,200 (3.4 lakh contracts). Call unwinding was seen at strike prices 9,300 (3.01 lakh contracts were shed), followed by 9,400 (3.8 lakh contracts were shed), and 9,500 (1.08 lakh contracts shed).

Maximum Put OI of 52 lakh contracts was seen at strike price 8,800 which will act as a crucial base for the index, followed by 9,000 which has accumulated 51 lakh contracts, and 8,900 which now holds 49 lakh contracts in OI. Put writing was seen at strike prices 8,900 (2.05 lakh contracts added), and 9,000 (3.5 lakh contracts added).

Put Unwinding was seen at strike price 9100 (11.1 lakh contracts shed). “We have seen significant Call writing at strike prices 9,100 and 9,050 while Put writing was intact at strike prices 9,000. Meaningful Call writing was seen at strike prices 9,000, 9,050 and 9,100 which will restrict its upside momentum,� Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

The foreign institutional investors (FIIs) bought shares worth Rs 578 crore compared to domestic institutional investors who sold Rs 594 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.

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.

Also read: Buy Deepak Fertilizers, target Rs 392: Dinesh Rohira


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