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

2 May, 2017 1:59 PM
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Trade Setup for Wednesday: Top 10 things you should know before Opening Bell

The Nifty closed above its crucial resistance level of 9,300 on Tuesday after falling towards its crucial support level of 9,250 which made a 'hanging man' kind of pattern on the daily candlestick charts.

The Nifty witnessed selling pressure towards its crucial resistance level of 9,350 but found support near its 5-days exponential moving average (DEMA) placed around 9,300.

For the trend to continue Nifty has to stay above 9,300 but a close below 9,280 may make things difficult for the bulls, say experts.

If the index stays below 9,280-9,300 then further decline towards 9,191 cannot be ruled out while a move above 9,367 would open room for further upside towards 9,500 levels.

The Nifty closed above its crucial support level of 9,300 with gains of 9.7 points at 9313.80. According to Pivot charts, the key support level for Nifty is placed at 9,271.62, followed by 9,229.43. If the index starts to move higher, then key resistance levels to watch out are 9,354.27, followed by 9,394.73.

Nifty Bank closed 16 points lower or 0.08 percent at 22,341 on Tuesday. Important Pivot level which will act as crucial support for the index is placed at 22,240, followed by 22,140. On the upside, the key resistance level is 22,466 followed by 22,592.

Maximum Call open interest (OI) of 47 lakh contracts stands at strike price 9,500 which will act as a crucial resistance level for the index in May series, followed by 9,400 which now holds 38 lakh contracts in open interest and 9,300 which has accumulated 28 lakh contracts in OI.

Call Writing was seen at strike prices 9,300 (5.8 lakh contracts added), followed by 9,400 (2.9 lakh contracts added), 9,500 (5.2 lakh contracts added), 9,600 (2.91 lakh contracts added) and 9,700 (0.48 lakh contracts added).

Call unwinding was seen at strike prices 8,900 (0.4 lakh contracts were shed), followed by marginal decline in strike prices 8,800, and 9,200.

Maximum Put OI of 45 lakh contracts was seen at strike price 9,000 which will act as a crucial base for the index in May series followed by 9,100 which has accumulated 42 lakh contracts in open interest, and 9,200 which now holds 43 lakh contracts in open interest.

Put writing was seen at strike prices 9,200 (9.4 lakh contracts added), followed by 9,300 (6.2 lakh contracts added), 9,100 (2.7 lakh contracts added), and 9,400 (1.3 lakh contracts added). Put Unwinding was seen at strike prices 9,700 and 9,800 levels.

“On the options front, maximum Put OI was seen at strike prices 9,000 followed by 9,200 strike while maximum Call OI was seen at strike prices 9,500 followed by 9,400,� Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.com.

“Fresh Put OI was seen at 9,000-9,400 while Call OI was at 9,300-9,600 strikes. Option OI scattered at different strike being the start of new F&O series,� he said.

The foreign institutional investors (FIIs) sold shares worth Rs1,150 crore compared to domestic institutional investors who bought Rs1,684 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.

Also read: North Korea's Top Diplomat Says Strike Against US Mainland Is 'Inevitable'

Source: moneycontrol.com

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