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Trade setup for Oct 28: Can Nifty hold 18,150 ahead of F&O expiry? Key market cues before Thursday’s session

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Nifty50 has formed a reasonable negative candle engulfing the previous bull candle. What does this mean and how is Dalal Street poised to start the coming session?

Trade setup for Oct 28: Can Nifty hold 18,150 ahead of F&O expiry? Key market cues before Thursday’s session
Indian equity benchmarks snapped a two-day winning streak in a choppy session on Wednesday, dragged by weakness in financial and oil & gas shares. However, strength in IT names provided some support.
The Bank Nifty index ended a four-day record-breaking spree with a loss of 0.9 percent. Yet, it is a little more than two percent from its peak.
What do the charts suggest for Dalal Street now?
The Nifty50 index has formed a reasonable negative candle engulfing the previous bull candle on the daily chart, a sign of the inability of the bulls to sustain highs, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
Bear dominance
The index has respected its previous day’s low but the bulls are feeble and lack of follow-up buying is limiting the upside, said Chandan Taparia, Vice President, Equity Derivatives and Technical, Broking and Distribution, Motilal Oswal Financial Services. Though Nifty50 has made a bearish candle on a daily scale, it has been forming higher lows for the past two days, he said.
Here are key things to know about the market before Thursday's session:
SGX Nifty
At 8:25 am on Thursday, Nifty futures trading on Singapore Exchange -- an early indicator of the Nifty50 index -- were down 1.5 point at 18,252, suggesting a flat start ahead on Dalal Street.
Global Markets
Equities in other Asian markets erased initial gains as focus shifted to monetary policy around the world going forward. Investors assessed whether central banks may consider tightening monetary policies earlier than anticipated. MSCI's broadest index of Asia Pacific shares outside Japan was flat, having risen as much as 0.1 earlier in the day. Japan's Nikkei 225 benchmark was down 0.9 percent.
Overnight on Wall Street, the S&P 500 fell, retreating 0.5 percent on from all-time high hit on the previous day, though the technology stocks-heavy Nasdaq ended flat thanks to strong earnings from Microsoft and Google parent Alphabet. The Dow Jones Industrial Average ended 0.7 percent lower.
S&P 500 E-Mini futures were up 0.1 percent in early Asian trade, hinting at a mildly positive opening in the US on Thursday.
What to expect on Dalal Street
Nifty50's short term-trend remains choppy, and the attempt of a bounce from the support level lacks strength, said HDFC Securities' Shetti. "A sustainable move only above the 18,300-18,350 band is likely to open further upside for the market ahead. Further weakness from here could find the next support at 18,000," he added.
The index has to hold the 18,150 level to sustain an upmove towards 18,350 and 18,450, with support at 18,100 and 18,000, added Taparia.
Volatility ahead of F&O expiry
Equity99 Co-Founder Rahul Sharma expects banking, infrastructure, sugar, automobiles and non-banking financial company shares to be in focus on Thursday. Good movement is expected with the monthly derivatives expiry due by the end of the day. "It is also the ex-date for the IRCTC split," he said.
Key levels to watch out for
Nifty50: Top support for the index is expected at 18,160, which, if breaks, may be followed by 18,050, and then 17,950. Strong resistance is expected at 18,280, followed by 18,350 and then 18,400, according to Sharma.
Bank Nifty: The banking index is expected to find immediate support at 40,600, followed by 40,350 and then 40,100, and meet immediate resistance at 41,000, followed by 41,270 as the next hurdle, he said.
FII/DII activity
Foreign institutional investors (FIIs) pulled out a net Rs 1,913.4 crore
from Indian equities on Wednesday. However, domestic institutional investors (DIIs) made net purchases of Rs 472.5 crore, exchange data showed.
Call/put open interest
The maximum open interest is at the strike price of 18,500, and there is a high accumulation at 18,300 and 18,400. On the other hand, the maximum put open interest is at 18,000, NSE data shows.
This suggests immediate resistance can be expected at 18,300-18,400 levels, and support comes in only at 18,000.
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 (%)
MFSL12,22,000981.350.13%29.10%
TVSMOTOR31,36,000629.50.58%26.79%
DIVISLAB7,16,4005,147.552.60%25.40%
CHOLAFIN53,47,500622.52.60%23.54%
INFY1,06,51,8001,726.951.12%22.04%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
APLLTD10,35,650754.5-0.35%-38.82%
AARTIIND15,62,3001,014.65-0.16%-27.31%
RBLBANK1,08,83,700206.5-2.36%-24.11%
POLYCAB3,64,5002,291.55-0.34%-23.29%
METROPOLIS3,96,2002,838.05-2.84%-22.16%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
PERSISTENT1,87,3504,0703.80%-51.96%
NAM-INDIA12,01,6004350.65%-37.95%
SRF15,13,1252,142.351.20%-35.36%
TORNTPOWER12,07,500501.450.48%-31.93%
JKCEMENT35,5253,194.050.92%-22.66%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
HDFC58,22,4002,902.90-0.24%42.38%
AXISBANK1,42,33,200788-6.49%36.53%
HINDALCO1,10,57,450476.95-1.69%32.49%
FEDERALBNK5,10,30,000100.1-1.91%30.77%
BAJAJ-AUTO14,54,2503,767.05-0.89%22.09%
(Increase in open interest and decrease in price)
52-week highs
SBI, HDFC, Kotak Mahindra Bank, Bank of Baroda, J&K Bank and TTK Prestige were among the 15 stocks in the BSE 500 universe that clocked 52-week highs.
52-week lows
Only one scrip in the broadest index on the bourse hit a 52-week low: Spandana Sphoorty Financial.
Volatility gauge
NSE's India VIX index — which gauges the expectation of volatility in the near term — rose 0.4 percent to settle at 16.8 on Wednesday, having risen as much as 1.7 percent during the session.
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