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This article is more than 1 month old.

Trade setup for Oct 18: Profit booking likely as Nifty50 extends winning run? Key market cues before Monday’s session

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Nifty50 has formed yet another long bull candle. What does this mean for the coming session and how is Dalal Street poised to start on Monday? Read on...

Trade setup for Oct 18: Profit booking likely as Nifty50 extends winning run? Key market cues before Monday’s session
Indian equity benchmarks soared to record highs once again with the Nifty50 index closing above the 18,300 mark for the first time. Across-the-board gains led by financial, IT and metal shares pushed the market higher on Friday. Broader markets also supported the overall market, though the midcap and smallcap indices clocked smaller gains compared to headline gauges.
What do the charts suggest for Dalal Street now?
The Nifty50 index has formed yet another long bull candle on the daily chart, showing signs of sharp upside momentum, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
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Time to buy on dips
Any dip near immediate support at 18,250 and then 18,170 is likely to be a fresh buying opportunity for an overall target of 18,500, said Rohit Singre, Senior Technical Analyst at LKP Securities. He expects an immediate hurdle near the 18,400-18,500 zone, where he said one can lock long gains.
Here are key things to know about the market before Monday's session:
SGX Nifty
At 8:09 am on Monday, Nifty futures trading on Singapore Exchange -- an early indicator of the Nifty index -- were up 26 points or 0.1 percent at 18,430, having risen as much as 65 points earlier in the day.
Global Markets
Asian shares declined ahead of the release of China's quarterly GDP reading. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.2 percent, and Japan's Nikkei 225 benchmark down 0.3 percent.
S&P 500 futures were flat in early Asian trade, suggesting a muted start in the US on Monday.
On Friday,  Wall Street's three main indices rose 0.5-1.1 percent after Goldman Sachs rounded out a strong earnings season for big banks. A surprise rise in retail sales strengthened views about economic recovery.
What to expect on Dalal Street
"Normally, three back-to-back gap-ups are formed in a strong uptrend movement before showing any downward correction from highs. Hence, there is a higher chance of another opening upside gap on Monday before any profit booking from higher levels," said HDFC Securities' Shetti.
He believes the short-term trend of the index remains positive, with no signal of any reversal formation at the peaks, he said.
Key levels to watch out for
According to Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, strong support for the Nifty50 index is placed at 18,200 in the coming days, followed by 18,000.
A key level for the bulls is 18,000, but one should avoid getting complacent at such levels, said Chavan. "The pragmatic approach would be to go one step at a time and try to avoid aggressive bets overnight. Stock-specific action continues and traders are advised to keep focusing on such bets," he said.
Profit booking can be expected near 18,500-18,600 this week, with immediate support at 18,265, said Shetti.
FII/DII activity
Foreign institutional investors (FIIs) net purchased Indian equities worth Rs 1,681.6 crore on Thursday, though domestic institutional investors (DIIs) played spoilsport. Net sales by DIIs stood at Rs 1,750.6 crore, exchange data showed.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 18,400, followed by 18,500. On the other hand, the maximum put open interest is at 18,300, and next at 18,200, NSE data shows. This suggests that resistance can be expected at 18,400-18,500 levels for now, and immediate support comes in at 18,300, followed by 18,200.
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 (%)
JKCEMENT68,4253,4753.22%39.13%
IRCTC21,31,3505,504.9511.17%32.80%
RECLTD2,76,78,000165.32.86%24.24%
PFC3,05,78,400149.354.15%21.98%
HAL19,52,7251,447.753.37%19.56%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
INDHOTEL1,46,64,000229.85-0.58%-14.41%
TATAMOTORS8,76,94,500497.95-1.78%-8.30%
BHEL11,80,62,00074.2-3.13%-8.10%
INDIAMART2,85,9759,440-0.93%-7.42%
JUBLFOOD19,96,5004,433-2.29%-6.92%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
WIPRO4,04,41,600711.855.41%-17.87%
VOLTAS21,45,5001,3230.86%-8.41%
MPHASIS19,97,7753,279.154.35%-7.76%
COFORGE6,87,6005,5824.15%-7.45%
BEL2,41,64,200210.950.64%-6.73%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
DALBHARAT4,30,5002,074.05-0.14%16.61%
HCLTECH2,01,15,2001,244-1.25%11.59%
CONCOR80,40,072679.85-1.41%10.71%
LALPATHLAB7,49,5003,662-1.99%10.14%
RBLBANK2,42,26,600191.9-1.18%9.32%
(Increase in open interest and decrease in price)
52-week highs
SBI, HDFC Bank, ITC, Wipro, Vedanta, Hindalco, Sun Pharma, L&T, IOC, HPCL, Grasim, NTPC and Canara Bank were among the 67 stocks in the BSE 500 universe that clocked 52-week highs. IRCTC, Godrej Properties, DLF, Godfrey Phillips, Cyient, Divi's, Dixon, IDBI Bank, MCX, Mindtree and Bata were also among them. 
52-week lows
While no stock in the broadest index on the bourse hit a 52-week low, Aashka Hospitals was among the few other scrips that hit the trough.
Volatility gauge
NSE's India VIX index — which gauges the expectation of volatility in the near term — ended 2.1 percent lower at 15.8 on Thursday, having slumped as much as 21.7 percent during the session.
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