Nagaraj Shetti of HDFC Securities said the Nifty is currently facing stiff resistance around 12,100 levels, there is a possibility of follow-through weakness in the next session.
The market closed in the red on June 4 after touching historic highs in the previous session, as traders turned cautious ahead of Monetary Policy Committee's interest rate decision on June 6. But benchmark indices managed to hold the psychological levels of 40,000 on the Sensex and 12,000 on Nifty.
Experts expect the MPC to reduce repo rate by at least 25 basis points (bps) and introduce some liquidity measures to could support the market in the near term.
"Considering the markets have had a phenomenal performance in the past month due to the Modi hysteria, this correction was expected and the markets have already discounted a 25bps interest rate cut by the monetary policy on 6th June. Therefore, any further rate cut will pose as a surprise that can swing the bourses in any direction," Umesh Mehta, Head of Research at Samco Securities told Moneycontrol.
The BSE Sensex declined 184.08 points to 40,083.54 while the Nifty50 slipped 66.80 points to 12,021.70 forming a Bearish Harami pattern on daily charts.
"Normally, such patterns are formed near top reversals. But we need confirmation of further negative closing to call this pattern as a trend reversal (top reversal). Hence, the Nifty is currently facing stiff resistance around 12,100 levels, there is a possibility of follow-through weakness in the next session," Nagaraj Shetti – Senior Technical & Derivative Analyst, HDFC Securities said.
A Bearish Harami pattern consists of a long green candle followed by a small red candle. The opening and closing points of the second red candle should be within the body of the first green candle, which indicates a trend reversal.
The broader markets managed to outperform frontline indices with the Nifty Midcap and Smallcap indices closing 0.08 percent and 0.16 percent lower respectively.
The market was shut on June 5 for Id-Ul-Fitr (Ramzan Id).
We have collated 15 data points to help you spot profitable trades:
Key support and resistance level for Nifty
Nifty closed at 12,021.65 on June 4. According to the Pivot charts, the key support level is placed at 11,986.6, followed by 11,951.5. If the index starts moving upward, key resistance levels to watch out are 12,076 and 12,130.3.
Nifty Bank
The Nifty Bank index closed at 31,589.05, down 64.60 points on June 4. The important Pivot level, which will act as crucial support for the index, is placed at 31,483.77, followed by 31,378.44. On the upside, key resistance levels are placed at 31,723.57, followed by 31,858.03.
Call options data
Maximum Call open interest (OI) of 19.45 lakh contracts was seen at the 12,500 strike price. This will act as a crucial resistance level for the June series.
This is followed by 12,000 strike price, which now holds 13.98 lakh contracts in open interest, and 12,400, which has accumulated 13.67 lakh contracts in open interest.
There was hardly any Call writing seen.
Call unwinding was seen at the strike price of 12,200, which shed 0.28 lakh contracts, followed by 12,000 strike which shed 0.25 lakh contracts.
Put options data
Maximum Put open interest of 26.18 lakh contracts was seen at 11,500 strike price. This will act as a crucial support level for the June series.
This was followed by 12,000 strike price, which now holds 16.57 lakh contracts in open interest and 11,700 strike price, which has now accumulated 15.16 lakh contracts in open interest.
There was hardly any Put writing seen.
Put unwinding was seen at the strike price of 12,000, which shed 0.36 lakh contracts, followed by 11,900 strike which shed 0.24 lakh contracts.
Stocks with a high delivery percentage
High delivery percentage suggests investors are accepting the delivery of the stock, which means that investors are bullish on it.
45 stocks saw a long buildup
34 stocks that saw short covering
A decrease in open interest, along with an increase in price, mostly indicates short covering.
72 stocks saw a short build-up
An increase in open interest along with a decrease in price mostly indicates a build-up of short positions.
44 stocks saw long unwinding
FII & DII data
Foreign Institutional Investors (FIIs) sold shares worth net Rs 416.08 crore and Domestic Institutional Investors (DIIs) sold Rs 355.42 crore worth of shares in the Indian equity market on June 4, as per provisional data available on the NSE.
Fund Flow Picture
Stocks in news
PSP Projects: Company received new orders worth Rs 156 crore during FY 2019-20.
Wipro: Company signed definitive agreement to acquire International TechneGroup
Housing sales up 13 percent in January-March on stable prices: CBRE - PTI
Coal India targets 660 mt output, lines up Rs 10,000 crore capex in FY20: PTI Sources
Indoco Remedies: US FDA issues 4 observations after inspection of the facility in Goa.
Govt may announce infusion of Rs 4,000 crore in PSU non-life firms in Budget: PTI
Tata Motors: Jaguar Land Rover & BMW Group announce collaboration for electrification technology. Electric drive units will be manufactured by each partner in their own production facilities.
DHFL: Company likely to miss payment deadline for Rs 1,150 crore due on NCDs. Blackstone is likely to pay DHFL around Rs 2,500 crore for Aadhaar By June 10 - CNBC-TV18 Sources.
Lupin: Japan's PMDA completes inspection of Mandideep facility (Unit-2), inspection closed with no critical or major observations.
Natco Pharma: Natco files ANDA for Bosentan 32mg tablets for the USA market.
Indian Card Clothing: ICRA revised rating in respect of Rs 17.60 crore line of credit of the company.
KPI Global Infrastructure: Company acquired 100 percent equity shares of KPIG Energia Private Limited, Surat (SPV).
Muthoot Capital Services: Company completed a securitisation transaction of Rs 140.37 crore on May 31, 2019.
India Grid Trust: Company issued non-convertible debentures of Rs 1,400 crore and announced acquisition of Sterlite Grid 2.
HEG: Company increased stake in Bhilwara Energy Limited, an associate company of HEG, from 29.48 percent to 49 percent.
Bulk Deals
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Analyst or Board Meet/Briefings
Agro Tech Foods: 32nd Annual General Meeting of the company will be held on July 17.
Shriram City Union Finance: Company's officials will meet Ruane. Cunniff and Goldfarb Inc. on June 8 and Ambit Capital on June 12.
KEC International: Company's officials will meet UBS Securities India on June 6.
Chalet Hotels: Company's officials will participate in UBS - India Mid-Cap Conference on June 6 and attent Morgan Stanley Summit 2019 on June 11.
Mahindra Lifespace Developers: Company's officials will meet analysts of Dolat Capital and Carnelian Capital on June 6.
Apollo Tyres: Company's officials will meet analysts/investors on June 6 and 7.
One stock under F&O ban period on NSE
For June 6, IDBI Bank is under an F&O ban period.
Securities in ban period under the F&O segment include companies in which the security has crossed 95 percent of the market-wide position limit.
