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

Moneycontrol News

The NSE Nifty, which started with a gap down opening, broke below its crucial support level of 50-day exponential moving average (DEMA) placed at 9,915 on Monday and made a strong bearish candle which looked like a ‘Bearish Belt Hold’ kind of pattern.

A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day (intraday high) which means that there is a small or no upper shadow and the index declines throughout the trading day.

Persistent fall makes up for the large body and a small lower shadow. However, in Monday’s trading session, Nifty recovered slightly in last one hour of trade which made a slightly big lower shadow.

The last-minute buying should not be taken as a bullish sign and investors should use pullback rallies to get out of long position or create fresh shorts. Traders should wait for consolidation or some kind of breakout before forming long positions.

The Nifty closed 91 points lower from its previous close of 9,964.40 to 9,872.60.

“The Nifty50 registered a Bearish Belt Hold kind of formation as a mark of respect to the Bearish Engulfing pattern witnessed on the weekly charts over this weekend. However, slightly longer lower shadow due to intraday recovery is suggesting some buying emerged at lower levels in Monday's trading session,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“A bounce can’t be overruled in next one or two trading sessions which is going to be used by market participants only to exit their long positions or create fresh shorts. We advise traders to wait for proper consolidation and some signs of strength before initiating fresh longs,” he said.

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

Key Support & Resistance Level for Nifty:

The Nifty closed at 9,872.60 on Monday. According to Pivot charts, the key support level for Nifty is placed at 9,805.6, followed by 9,738.6. If the index starts to move higher, key resistance levels to watch out are 9,950.05, followed by 10,027.5.

Nifty Bank:

The Nifty Bank closed at 24,165.05, down 0.84 percent on Monday. The important Pivot level which will act as crucial support for the index is placed at 23,999.07 followed by 23,833.04. On the upside, the key resistance level is 24,347.47, followed by 24,529.84.

Call Options Data:

Maximum Call open interest (OI) of 70.42 lakh contracts stands at strike price of 10,000 which will act as a crucial resistance level for the index in September series, followed by 10,200 which now holds 58.06 lakh contracts in open interest and 10,100 which has accumulated 57.76 lakh contracts in OI.

Call Writing was seen at strike prices 10,000 (28.87 lakh contracts added), followed by 9,900 (28.62 lakh contracts were added) and 9,800, which saw the addition of 5.06 lakh contracts.

Meanwhile, Call unwinding was seen at strike prices 10,300 (6.7 lakh contracts shed), 10,200 (6.36 lakh contracts shed), and 10,400 (2.12 lakh contracts shed).

Put Options Data:

Maximum Put OI of 41.58 lakh contracts was seen at strike price 9,900 which will act as a crucial base for the index in September series, followed by 9,700 which has accumulated 39.70 lakh contracts in open interest, and 9,800 which now holds 38.79 lakh contracts in open interest.

Put writing was seen at strike prices 9,800, which saw the addition of 7.67 lakh contracts, followed by 9,700 that added 5.9 lakh shares.

Meanwhile, Put unwinding was seen at strike prices 10,000, which shed 12.89 lakh contracts, followed by 10,100, which saw the shedding of 5.65 lakh contracts and 10,200, which shed 2.12 lakh contracts.

FII & DII Data:

Foreign institutional investors (FIIs) sold shares worth Rs 1,249.45 crore while domestic institutional investors (DIIs) bought shares worth Rs 1,009.98 crore in the Indian equity market on Monday.

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.

18 stocks saw Long Buildup:

22 stocks saw Short Covering:

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

117 stocks saw Long Unwinding:

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

56 stocks saw Short Buildup

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