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

Uttaresh Venkateshwaran

Moneycontrol News

The Nifty which started on a muted note breached its crucial support level of 10,100 in trade, but bulls managed to push the index towards its opening level, which made a ‘Hammer’ like the pattern on the daily candlestick charts.

The Nifty which opened at 10,139.60 rose to an intraday high of 10,158.90 but then bears took control over the D-Street and pushed the index below 10,100. The index bounced back from its 13-days exponential moving average placed around 10,060 before closing at 10,121 down 19 points.

A Hammer is a bullish reversal pattern which forms after a decline. It is formed when the index trades significantly lower than its opening price for the most part of the trading day but bulls manage to push the index either above or near its opening level towards closing.

It has no or a tiny upper shadow, a small body, and a long lower shadow. The strong finish indicates that buyers regained their hold on D-Street which is a bullish sign.

However, some experts are not entirely convinced and suggest investors ignore the last minute buying as it could be an early indication of an intermediate top. A confirmation would come, it the index breaks above 10,179 – all-time high level for Nifty.

“The Nifty registered a Hammer kind of formation as it smartly recovered from the intraday lows of 10,058 levels after testing 13 days-DEMA. However, this intraday recovery in itself should not be read as a positive sign unless Nifty registers a fresh breakout above 10179 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“The index recorded a narrow range bound move for almost 6 trading sessions which can also be a sign of distribution at the top. As our momentum oscillators also generated a sell signal we advise traders to remain cautious. In case Nifty breakout above 10,179 then it can initially extend its rally up to 10329 levels,” he said.

India VIX remained flattish at 11.63. Lower volatility is supporting the bullish bias of the market even after the profit booking decline of 100 points from higher zones.

We have collated the top ten data points to help you spot profitable trade:

Key Support & Resistance Level for Nifty:

The Nifty closed at 10,121.9 on Thursday. According to Pivot charts, the key support level for Nifty is placed at 10,067.37, followed by 10,012.83. If the index starts to move higher, key resistance levels to watch out are 10,167.67, followed by 10,213.43.

Nifty Bank:

The Nifty Bank closed at 24,799.2 on Thursday. The important Pivot level which will act as crucial support for the index is placed at 24,672.89 followed by 24,546.6. On the upside, the key resistance level is 24,958.99, followed by 25,118.8.

Call Options Data:

Maximum Call open interest (OI) of 56.18 lakh contracts stands at strike price 10,200 which will act as a crucial resistance level for the index in September series, followed by 10,100 which now holds 37.75 lakh contracts in open interest and 10,300 which

has accumulated 34.82 lakh contracts in OI.

Call Writing was seen at strike prices 10,100 (10.25 lakh contracts added), followed by 10,400 (2.15 lakh contracts were added) and 10,300, which saw the addition of 2 lakh contracts.

Meanwhile, Call unwinding was seen at strike prices 10,200 (4.37 lakh contracts shed), 10,500 (3.78 lakh contracts shed), and 10,000 (1.13 lakh contracts shed).

Put Options Data:

Maximum Put OI of 54.12 lakh contracts was seen at strike price 9,900 which will act as a crucial base for the index in September series followed by 10,000 which has accumulated 51.78 lakh contracts in open interest, and 10,100 which now holds 39.36 lakh

contracts in open interest.

There was hardly any put writing seen in the market here.

Meanwhile, Put unwinding was seen at strike prices 10,200, which shed 5.74 lakh contracts, followed by 10,000, which saw the shedding of 5.19 lakh contracts and 10,100, which shed 1.33 lakh contracts.

FII & DII Data:

Foreign institutional investors (FIIs) sold shares worth Rs 1,204.95 crore, and domestic institutional investors (DIIs) bought shares worth Rs 1,416.55 crore in the Indian equity market on Thursday.

Stocks with high delivery percentage:

High delivery percentage suggests that investors are accepting the delivery of the stock, which means that investors are bullish on the stock.

23 stocks saw Long Buildup:

24 stocks saw Short Covering:

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

83 stocks saw Long Unwinding:

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

86 stocks saw Short Buildup

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