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Trade Setup for Aug 12: Will Nifty50 attempt to break above 16,350? Check key market cues before Thursday’s session

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Oil & gas and metal shares helped Nifty50 recoup the day's losses. Analysts say it is technically signalling a broader high-low range movement. Here is how the August 12 session is poised to start.

Trade Setup for Aug 12: Will Nifty50 attempt to break above 16,350? Check key market cues before Thursday’s session
Indian equity benchmarks ended a volatile session on Wednesday flat with the Nifty50 index recovering all of its day's losses. Strong investor interest in metal stocks and a recovery from deeper losses in broader indices helped the market bounce back.
Bank Nifty was flat, having moved in a tight range. The banking index recouped half of its intraday losses to finish the day with a cut of 0.63 percent.
So, what do the charts suggest for Dalal Street?
Nifty50 formed a small negative candle on the daily chart with a long lower shadow, technically signalling a broader high-low range movement, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
"This pattern doesn't have any predictive value and the market seems to have shifted into another round of narrow range movement after the upside breakout of a larger range movement at 16,000 recently," he said.
'V-shaped recovery'
"The broader market importantly witnessed a V-shaped recovery that gave a sigh of relief to market participants. Apart from this, the real star was the metal basket, which made a spectacular comeback after 2-3 days of minor profit booking," said Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking.
Here are key things to know about the market before Thursday's session:
SGX Nifty
Nifty futures trading on Singapore Exchange -- an early indicator of the NSE Nifty50 benchmark index in India -- were up 26 points or 0.16 percent at 16,320 at 8:08 am, indicating a positive start ahead on Dalal Street.
What to expect
"The short term trend of Nifty continues to be rangebound with volatile movement, and similar market action is expected to continue in the next session. The index could possibly make another upside attempt towards 16,350 on Thursday," HDFC Securities' Shetti said.
Global markets
Equities in other Asian markets failed to follow a strong close on Wall Street with concerns about the spread of the Delta variant of Covid-19. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.25 percent. Japan's Nikkei 225 index rose 0.35 percent. Overnight on Wall Street, the Dow and S&P 500 indices closed at records as data indicated US inflation growth may have peaked, easing fears the Fed would rush to reduce its economic support.
Call/put open interest
The maximum call open interest is at the strike price of 16,300, and then 16,400. On the flipside, the maximum put open interest is concentrated at the strike price of 16,200, and next only at 16,000, according to data from NSE. This indicates that immediate resistance can be expected at 16,300, followed by 16,400, and support at 16,200, followed by 16,000.
Key levels to watch out for
Nifty50: "For Thursday, crucial support will be at 16,200, a level if breaks then 16,145... A closing below 16,145 will extend the weakness to continue till 16,050-16,000 levels. Levels of 16,300-16,350 will act as a hurdle," said Rahul Sharma, Co-Founder, Equity99.
Chavan said the 16,320-16,360 band remains a sturdy wall for the weekly expiry; support is clearly visible at 16,200-16,170 levels.
Nifty Bank: Now 36,050 will be a hurdle, crossing which the banking index can go to 36,200-36,300 levels. On the downside, 35,650 will act as strong support, followed by 35,400-35,350 levels, according to Sharma.
Long build-up
Here are five stocks that saw an increase in open interest as well as price, suggesting a build-up of long positions:
SymbolCurrent OICMPPrice change (%)OI change (%)
SIEMENS15,95,5502,1986.67%31.78%
HAVELLS36,00,5001,243.701.27%17.72%
ALKEM5,54,2003,681.953.24%16.24%
BHARATFORG72,13,500787.44.54%10.25%
MFSL28,61,9501,0673.92%9.52%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
LALPATHLAB5,22,0003,803.10-2.02%-3.50%
LTTS4,57,0003,669.95-1.02%-2.84%
IBULHSGFIN3,49,52,500248.95-1.58%-2.38%
TATACONSUM76,65,300764.9-0.92%-2.27%
GLENMARK82,40,900579.4-0.63%-2.01%
(Decrease in open interest and price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
POWERGRID2,28,46,572176.32.80%-7.89%
COALINDIA5,15,46,600144.51.65%-5.11%
RBLBANK3,80,10,300178.252.89%-3.69%
ICICIPRULI60,25,5006590.08%-2.19%
NATIONALUM8,23,31,00082.65.56%-2.19%
(Increase in open interest and a decrease in price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
TRENT11,59,275895.5-5.45%44.97%
LUPIN64,94,0001,050.85-6.20%31.44%
MANAPPURAM2,38,74,000167.5-12.12%28.22%
STAR14,62,725677.75-2.34%22.75%
ASTRAL2,97,8251,973-4.47%22.25%
(Decrease in open interest and an increase in price)
Volatility gauge
India VIX index -- which gauges the expectation of volatility in the market in the short term -- cooled off to be flat at 12.71, having soared as much as 5 percent to 13.33 on Wednesday.
FII/DII flow
Foreign institutional investors brought in Rs 238.14 crore into the Indian capital market on Wednesday. Net purchases by domestic institutional investors stood at Rs 206.28 crore, exchange data showed.
Earnings to watch
Hero MotoCorp, Ashok Leyland, Eicher Motors, Tata Steel, Bharat Petroleum, Aurobindo Pharma, Bharat Forge, IRCTC, RailTel Corporation, Coffee Day Enterprises, Page Industries, Power Finance Corp and NMDC are scheduled to report their earnings for the quarter ended June 30 on Thursday.
Engineers India, Dish TV, Natco Pharma, GR Infraprojects, IRCON, Max India, Thyrocare, Trident, HCC, Rashtriya Chemicals, Religare Enterprises, Ujjivan Financial, HealthCare Global and RITES are also among the companies due to post their quarterly numbers on the same day.
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