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This article is more than 3 month old.

Trade Setup for Aug 31: Is Nifty50 hitting 17,000 inevitable now? Check key market cues before Tuesday’s session

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Analysts say the Nifty50 index looks set to rise further going forward. Here's how the August 31 session is poised to start.

Trade Setup for Aug 31: Is Nifty50 hitting 17,000 inevitable now? Check key market cues before Tuesday’s session
Indian equity benchmarks surged to record closing highs on Monday amid positive global cues after the Fed Chair struck a more dovish tone than some investors had expected in his Jackson Hole speech. Banking stocks were at the forefront of the rally, with the Nifty Bank index jumping 2.02 percent.
So, what do the charts suggest for Dalal Street?
The index formed a long bull candle, according to Nagaraj Shetti, Technical Research Analyst, HDFC Securities. This, he said, is a positive indication, based on which, one may expect further upside in the short term.
"A sustainable move above 17,000 could open the next upside target of around 17,500 levels in the next two weeks," he said.
17,200 possible in short term?
Nifty50 has not only tested the daily upper Bollinger band but is also attempting to extend beyond that, said Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas.
"Beyond 17,000, the Nifty index can stretch to 17,200 in the short term. On the other hand, immediate support shifts higher to 16,850 whereas 16,722-16,764 levels will now act as crucial short term support," he said.
Here are key things to know about the market before Tuesday's session:
SGX Nifty
Nifty futures trading on Singapore Exchange -- an early indicator of India's Nifty50 index -- were down 51 points or 0.30 percent at 16,913.50 at 8:05 am on Tuesday, signalling a weak opening ahead on Dalal Street.
Global markets
Equities in other Asian markets declined despite overnight record highs on Wall Street, as worries about China’s slowing economic growth and regulatory changes hurt investors' sentiment. MSCI’s gauge of Asia Pacific stocks outside Japan slipped 0.25 percent and Japan’s Nikkei 225 gauge 0.30 percent. On Monday, Beijing cut the amount of time players under the age of 18 can spend on online games to an hour on Fridays, weekends and holidays.
In the US, all three main indices rose, with the S&P 500 and Nasdaq composite hitting record highs as tech stocks jumped.
What to expect on Dalal Street
For Nifty50 to move to the 17,050 mark on Tuesday, further support of financial, telecom and metal shares will be needed, according to Shrikant Chouhan, Executive Vice President-Equity Technical Research at Kotak Securities.
"The earlier resistance of 16,700-16,720 would be a major support for the market and the strategy should be to buy at every minor and at major supports... Major support exists at 16,850 and 16,700 levels," he said.
Key levels to watch out for
Nifty50: Rohit Singre, Senior Technical Analyst at LKP Securities, sees immediate support for the index near the 16,850-16,770 zone. "If Nifty manages to hold above those levels, we may see it breach the 17,000 mark," he said.
HDFC Securities' Shetti said the short-term trend of the index continues to be positive. "There is no sign of tiredness at highs and the index is ready to move above 17,000 levels in the coming sessions," he said.
Singre suggests traders to lock some gains near 17,000 but warns that the risk-reward ratio is unlikely to be in favour there, and advises fresh buying only on a dip near 16,850.
Nifty Bank: The banking index looks more promising after long consolidation, according to Rahul Sharma, Co-Founder of Equity99. He expects 36,200 to now act as strong support for the Nifty Bank index, followed by 36,000. Hurdles are placed placed at 36,550, 36750 and 36900 levels, he said.
FII/DII activity
Foreign institutional investors pumped a net Rs 1,202.81 crore into the Indian capital market on Monday. Domestic institutional investors made net purchases of Rs 688.85 crore, exchange data showed.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,000, followed by 17,100. On the other hand, there is a high degree of put open interest at the strikes of 16,800 and 16,700, NSE data shows.
This indicates that immediate resistance can be expected at 17,000-17,100 levels, and support comes in at 16,800, and then 16,700.
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 (%)
POLYCAB67,2002,0547.88%473.66%
INDIAMART14,2507,8469.54%467.37%
SYNGENE81,6006301.49%316.67%
IEX9,35,00048811.91%197.86%
MCX2,70,5501,5302.12%167.79%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
MPHASIS11,79,7502,810-1.41%-3.03%
BEL2,33,35,800183.7-0.62%-0.15%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
SRF6,58,1259,741.952.96%-5.11%
METROPOLIS3,00,0002,797.202.34%-4.67%
LICHSGFIN2,34,20,000390.52.74%-3.40%
AMARAJABAT80,05,000696.51.71%-3.27%
MRF43,69078,379.951.37%-2.70%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
OFSS95,3754,749.95-0.81%33.29%
BALKRISIND11,98,8002,286.95-0.38%14.01%
INFY2,77,42,8001,704.50-0.68%5.80%
TCS95,71,8003,716-0.24%5.45%
NESTLEIND3,83,25019,824.35-1.02%5.36%
(Increase in open interest and decrease in price)
Stocks hitting 52-week highs
TCS, HUL, Britannia, Bajaj Finance, Bajaj Electricals, SBI Life, Divi's Labs, Godrej Consumer Products, HAL, IEX, Larsen & Toubro, Larsen & Toubro Infotech, L&T Technology Services, Trent, Tata Consumer, Polycab, Persistent, Naukri PI Industries and Fortis were among the stocks that clocked 52-week highs.
Stocks hitting 52-week lows
Not a single stock in the BSE 500 universe -- the broadest index on the bourse -- hit a 52-week low. Outside the 500-scrip universe,  MARG, BFL Asset Finvest and Greencrest Financial Services were among the few stocks that hit 52-week lows.
Volatility gauge
The India VIX index -- which measures the expectation of volatility in the market -- eased 0.65 percent to 13.32, having cooled off as much as 7.53 percent during Monday's session as the market raced to all-time highs.
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