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Trade setup for Apr 7: After 2 days of losses, can Nifty50 hold on to 17,800? Key market cues, technical levels and more

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Trade setup for Apr 7: After 2 days of losses, can Nifty50 hold on to 17,800? Key market cues, technical levels and more

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Trade setup for Thursday, April 7: More downside may be on the cards for the Nifty50, say experts. Here's what the technical charts suggest for the coming session.

Trade setup for Apr 7: After 2 days of losses, can Nifty50 hold on to 17,800? Key market cues, technical levels and more
Indian equity benchmarks extended losses to a second straight day on Wednesday, dragged by the HDFC twins and other private sector financial stocks. Gains in metal and oil & gas names offered some support.
Investors' focus globally returned to the prospect of aggressive tightening of pandemic-era monetary policy as they continued to track updates on the Russia-Ukraine war closely.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a small negative candle on the daily chart with a minor upper shadow, confirming a short-term top reversal at the swing high of 18,114 and the beginning of downward correction in the market, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. 
"The index is placed above the previous upside gap of April 4 at 17,800," he said. 
More weakness ahead?
The intraday texture of the market has turned weak and a fresh pullback rally is possible only after the index breaks out above 17,900, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
"For traders, 17,900 will act as an immediate hurdle, below which, a weak formation is likely to continue till 17,700-17,650 levels. However, above 17,900, the index could move up to 17,820-17,865 levels," he said.
Here are key things to know about the market before the April 7 session:
SGX Nifty
At 7:43 am on Thursday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty index -- were down 72.5 points or 0.4 percent at 17,795, suggesting a weak start ahead on Dalal Street.
Equities in other Asian markets drop following weakness on Wall Street, fuelled by tech and other growth stocks. Minutes from the Fed's March meeting sharpened investors' focus on the US central bank's plans to fight inflation. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.3 percent in early hours.
Japan's Nikkei 225 tanked two percent. China's Shanghai Composite was down 0.3 percent, South Korea's KOSPI 1.2 percent and Singapore's Straits Times 0.6 percent. Hong Kong's Hang Seng eked out a gain of 0.1 percent.
S&P 500 futures were down 0.2 percent. On Wednesday, the S&P 500 fell one percent, the Dow Jones 0.4 percent and the tech stocks-heavy Nasdaq Composite 2.2 percent.
What to expect on Dalal Street
HDFC Securities' Shetti believes the short-term trend of the 50-scrip index appears to have turned negative and more correction is on the way.
He sees the possibility of further weakness to 17,600 levels in the next few sessions. "The confirmation of a bearish island reversal could open more downside for the market," he added. 
Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas, is of the view the Nifty50 can only start to move up again once it fills up the gap area of 17,791-17,703 levels. He suggests traders to adopt at buy-on-dips strategy.
Levels to watch out for
Despite the recent fall, the Nifty50 is holding up almost 700 points above its 200-day simple moving average.
Period (No. of days)DMA
517,790.7
1017,537.5
2017,221.1
5017,122.9
10017,314
20017,111
Mohit Nigam, Head-PMS at Hem Securities, pointed out the following levels:
IndexSupportResistance
Nifty5017,65018,050
Nifty Bank37,20038,150
FII/DII activity
Foreign institutional investors (FII) net sold Indian shares worth Rs 2,280 crore on Wednesday, data shows. Domestic institutional investors (DIIs), however, made net purchases of Rs 105.4 crore.
Call/put open interest
According to provisional exchange data, the maximum call open interest is accumulated at the strike price of 18,000, with almost two lakh contracts, and the next highest at 18,100 and 17,900, with 1.4 lakh each.
On the other hand, the maximum put open interest is at the 17,500 mark, with 1.2 lakh contracts, and the next highest at 17,800, with one lakh contracts.
This suggests immediate resistance at 17,900 before the major hurdle of 18,000 and significant support below 17,800 only at 17,500.
Long build-up

Here are five stocks that saw an increase in open interest as well as price:

SymbolCurrent OICMPPrice change (%)OI change (%)
TORNTPOWER31,86,000541.951.61%23.73%
NTPC5,95,19,400153.62.88%21.95%
COALINDIA3,38,77,200194.753.21%17.12%
GUJGASLTD42,57,500527.11.04%15.80%
INDHOTEL2,15,01,612253.26.90%14.38%

Long unwinding

SymbolCurrent OICMPPrice change (%)OI change (%)
PFIZER1,38,0004,466.45-0.66%-1.72%
ATUL1,63,8759,940.35-0.85%-1.56%
INDUSINDBK2,39,36,400971.25-0.45%-1.33%
BAJFINANCE40,15,7507,369-0.59%-1.20%
JKCEMENT3,95,3252,698-0.30%-0.75%

(Decrease in open interest as well as price)

Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
COROMANDEL14,28,7508320.59%-3.11%
LICHSGFIN2,44,30,000388.450.65%-1.14%
ASHOKLEY3,94,74,000124.70.69%-1.00%
CHAMBLFERT30,48,000469.21.06%-0.89%
GSPL25,50,000284.150.18%-0.60%
(Increase in price and decrease in open interest)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
IRCTC1,11,52,750784.4-4.41%14.61%
TATAMOTORS7,18,42,800457.65-0.50%13.15%
IPCALAB8,68,9501,021.45-1.22%13.10%
DIXON5,26,6254,610-1.09%12.75%
ZEEL6,22,62,000293.5-2.49%12.32%
52-week highs
A total of 29 stocks in the BSE 500 pack -- the broadest index on the stock exchange -- hit 52-week highs:
ABFRLDELTACORPRCF
ADANIGREENEIHOTELSCHAEFFLER
ADANIPOWERIDFCSOLARINDS
ANGELONEINDHOTELSWANENERGY
ATGLINTELLECTTATAPOWER
BALRAMCHINJINDALSTELTRENT
BANKBARODAJKPAPERUFLEX
BLUESTARCOMINDACORPVEDL
CHALETNTPCWELCORP
CREDITACCPOWERGRID
52-week lows
No BSE 500 stock hit a 52-week low.
Fear gauge

The India VIX -- also known as the fear index -- rose 2.9 percent to settle at 19 on Wednesday, having jumped as much as 4.3 percent during the session. Russia's move to invade Ukraine in late February had sent the VIX soaring to a 20-month high of 34.

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