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    Trade setup for Nov 2: Will Nifty50 reclaim 18,000? Key market cues before Tuesday's session

    Trade setup for Nov 2: Will Nifty50 reclaim 18,000? Key market cues before Tuesday's session

    Trade setup for Nov 2: Will Nifty50 reclaim 18,000? Key market cues before Tuesday's session
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    By Sandeep Singh   IST (Updated)

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    Nifty50 has a formed a strong bullish candle. What does this mean and how is Dalal Street poised to start the coming session? Read on...

    Indian equity benchmarks made a big comeback on Monday after three days of losses, helped by broad-based gains led by financial, IT, metal and consumer goods shares. The Nifty50 index narrowed its distance from a lifetime high, clocked last month, to 3.6 percent from five percent.
    What do the charts suggest for Dalal Street now?
    The Nifty50 index has formed a strong bullish candle but continues to trade below its 20-day simple moving average, according to Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities. Technically, it has completed one leg of a pullback rally, with 18,000 and 18,050 now expected to act as  crucial resistance, he said.
    "The intraday texture of the market is bullish but traders may prefer to take caution stance between 17,975 and 18,020 levels. As long as the index trades above 17,800, the uptrend texture is intact, said Chouhan, who sees strong support for the bulls at 17,850-17,800, below which the uptrend may be vulnerable.
    It's a rebound, but...
    "We feel it’s a rebound and the bias would change if Nifty manages to cross and hold above 18,100," said Ajit Mishra, VP-Research at Religare Broking. He suggests market participants continue with a cautious approach and avoid jumping into a trade. 
    Here are key things to know about the market before Tuesday's session:
    SGX Nifty
    At 8:15 am on Tuesday, Nifty futures trading on Singapore Exchange -- an early indicator of the Nifty50 index -- were up 19 points or 0.1 percent at 18,016, suggesting a positive start ahead on Dalal Street.
    Global Markets
    Equities in other Asian markets were largely higher as investors awaited key central bank meetings that could set the tone for risk appetite heading into next year. MSCI's gauge of Asia-Pacific shares outside Japan recovered early losses to rise 0.9 percent. Japan's Nikkei 225 index was down 0.2 percent.
    Overnight on Wall Street, the three main gauges rose 0.2-0.6 percent to scale record closing highs. Investors looked ahead to a major Federal Reserve meeting later in the week.
    S&P 500 futures were down 0.2 percent in early Asian trade.
    What to expect on Dalal Street
    A key level to watch out for now is 18,000, said Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas."If the bulls manage to cross that level on a closing basis, the short-term range will again move higher. Beyond 18000, a falling trendline near 18,180 will be the subsequent level to watch out for. On the downside, levels of 17,850-17,800 will act as immediate support," he said.
    After the 18,000 mark, the index is more likely to accelerate towards 18,200, believes Shrikant Chouhan, Head - Equity Research (Retail), Kotak Securities.
    "The market spent most of its time between 18,200 and 18,250 levels while the Nifty was falling. Until the index does not cross 18,200 decisively, the market would remain volatile and give more importance to the flow of negative news. On the downside, a big base would be 17,800," he said.
    The market is making good moves on both sides, and it is difficult to predict any future move, said Rahul Sharma, Co-Founder, Equity99.
    He expects some correction in short term and suggests caution.
    Key levels to watch out for
    Nifty50: Immediate and very strong resistance for the index is at 18,000, which, if taken out, might be followed by 18,150 and 18,225 levels, according to Sharma, who expects strong support at 17,890, followed by 17,700 and  17,500.
    Bank Nifty: The banking index finds strong resistance at 40,000, upon breaking which the level of 40,270 may be possible, followed by 40,500. Strong support is expected at 39,670, followed by 39,500 and then 39,350, he said.
    FII/DII activity
    Foreign institutional investors (FIIs) remain bearish on Indian equities. On Monday, they withdrew a net Rs 202.1 crore from Indian shares. Domestic institutional investors (DIIs), however, made net purchases of Rs 116 crore, exchange data showed.
    Call/put open interest
    The maximum open interest remains at the strike price of 18,000, and the next highest at 18,200. The maximum put open interest is placed at the strikes of 17,800 and then 17,700, NSE data shows. This suggests immediate resistance can be expected at 18,000 and support comes in at 17,700.
    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 (%)
    FSL3,58,8002063.78%187.68%
    GSPL1,32,600324.055.79%173.08%
    BSOFT4,04,3004121.13%86.82%
    SBICARD5,48,5001,075.151.48%36.55%
    GODREJPROP20,89,4252,370.105.66%22.74%
    Long unwinding
    SymbolCurrent OICMPPrice change (%)OI change (%)
    BANDHANBNK3,12,42,600289.2-1.03%-3.24%
    BEL2,49,81,200202.1-2.81%-0.03%
    (Decrease in open interest and price)
    Short-covering
    SymbolCurrent OICMPPrice change (%)OI change (%)
    DRREDDY28,76,3754,819.953.29%-3.29%
    LUPIN88,96,950951.352.61%-3.10%
    EXIDEIND2,81,77,200179.33.46%-2.66%
    RBLBANK2,98,72,900186.43.13%-2.44%
    ZEEL7,06,05,0003133.57%-1.79%
    (Decrease in open interest and increase in price)
    Short build-up
    SymbolCurrent OICMPPrice change (%)OI change (%)
    WHIRLPOOL55,2502,137-2.85%231.67%
    LAURUSLABS8,37,900498.25-3.59%106.98%
    ATUL10,5759,083.20-0.72%60.28%
    M&M76,67,100877-1.09%25.11%
    ESCORTS84,17,7501,557.50-1.30%20.10%
    (Increase in open interest and decrease in price)
    52-week highs
    A total of 11 stocks in the BSE 500 gauge -- the broadest index on the bourse -- hit 52-week highs: ABB, Birla Corp, Blue Dart, Blue Star, Century Plyboard, Escorts, Grindwell, KSB, Minda, Sun TV and Triveni Turbine.
    52-week lows
    Three stocks in the index hit 52-week lows: Astrazeneca Pharma, Indostar Capital Finance and Spandana Sphoorty Financial.
    .
    Volatility gauge
    NSE's India VIX index — which gauges the expectation of volatility in the near term — cooled off on Monday, ending 1.1 percent lower at 17.2, reversing course after spiking as much as 3.8 percent during the session.
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