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Trade setup for Oct 29: Will Nifty recover after its worst day since April? Key market cues before Friday's session

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Nifty50 has formed a long bear candle on the daily chart. What does this mean and how is Dalal Street poised to start the coming session?

Trade setup for Oct 29: Will Nifty recover after its worst day since April? Key market cues before Friday's session
Indian equity benchmarks suffered their biggest single-day fall since April on Thursday, dragged primarily by financial, IT and consumer stocks amid a sell-off across sectors. The Bank Nifty tumbled 3.3 percent -- its worst fall since April 12 -- to move further away from recent peaks.
What do the charts suggest for Dalal Street now?
The Nifty50 index has formed a long bear candle on the daily chart, signalling a decisive downside breakout of immediate supports, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
"Such sharp one-day weakness has not occurred in the last 35-40 sessions, and this could indicate a shift in momentum from longs to shorts," he said.
Stay focused on quality
The index is likely to respect 17,700-17,600 levels in the next 2-3 days,
said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
"We should look for buying opportunities in strong quality companies with a medium-term outlook. On the upside, 18,000 and 18,200 will be the biggest hurdles. It is advisable to trade according to the levels mentioned," he said.
Here are key things to know about the market before Friday's session:
SGX Nifty
At 7:42 am on Friday, Nifty futures trading on Singapore Exchange -- an early indicator of the Nifty50 index -- were up 23.5 points or 0.1 percent at 17,904, having risen as much as 48 points earlier in the day, suggesting a positive start ahead on Dalal Street.
Global Markets
Equities in other Asian markets and US stock futures slipped on Friday amid concerns about growth and inflation among investors globally. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent in early deals, and headed for a weekly loss of more than one percent snapping three weeks of gains. Japan's Nikkei index was down 0.1 percent.
S&P 500 E-Mini futures were down 0.4 percent in early Asian trade. On Thursday, key Wall Street indices jumped 0.7-1.4 percent with two of them hitting record highs.
What to expect on Dalal Street
The decisive weakness in the market following rangebound movement could indicate a sharp reversal of the near-term uptrend, said HDFC Securities' Shetti. "One may expect further weakness in the coming sessions. The next lower levels to be watched are 17,590-17,550 by next week. Any attempt of an upside bounce from here could encounter resistance around 18,040," he warned.
The market has been volatile and investors need to be cautious as further downside cannot be ruled out for the time being, according to Rahul Sharma, Co-Founder of Equity99.
He expects banking, automobile, metal and infrastructure shares to be in focus in the last trading session of the week, as more companies report their results.
Key levels to watch out for
Nifty50: Strong support for the index is expected at 17,750, which, if broken, might be followed by 17,660, followed by next strong support at 17,500. Strong resistance is expected at 17,950, followed by 18,000 and then 18,200, according to Sharma.
Bank Nifty: The banking index has very strong support at 38,300, which, if breached, might be followed by 38,000 and then 37,700, he said. Sharma expects strong resistance for the Bank Nifty at 38,850, which, if breached, might be followed by the index regaining the 40,000 mark.
FII/DII activity
Foreign institutional investors (FIIs) pulled out a net Rs 3,818.5 crore
from Indian equities on Thursday. However, domestic institutional investors (DIIs) made net purchases of Rs 836.6 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 18,000. On the other hand, the maximum put open interest is at 17,800, and next at 17,500, NSE data shows.
This suggests immediate resistance can be expected in the 18,000-18,300 zone levels, and support comes in at 17,800.
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 (%)
IRCTC8,88,875921.5511.46%258.68%
LT21,29,2251,815.901.80%49.66%
MARUTI8,22,7007,367.600.20%35.29%
ASIANPAINT8,63,7003,1150.89%9.14%
PIDILITIND5,09,5002,382.450.47%8.15%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
TORNTPOWER6,39,000488.5-2.50%-64.08%
APLLTD6,12,150743.45-1.85%-57.95%
PERSISTENT81,1503,985.40-1.56%-57.30%
NAM-INDIA5,68,000415.35-4.78%-52.11%
POLYCAB2,19,0002,261.10-1.28%-48.49%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
BANDHANBNK66,36,600298.251.34%-83.16%
JKCEMENT17,6753,259.452.13%-76.24%
ALKEM64,8003,760.600.58%-54.63%
METROPOLIS1,89,0002,9222.92%-52.80%
LALPATHLAB2,04,2503,556.451.46%-35.13%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
MOTHERSUMI1,34,33,000224.4-0.47%64.51%
CHOLAFIN20,98,750604.35-2.97%37.46%
BEL1,16,50,800200.3-3.21%32.03%
TATACONSUM32,07,600810-1.04%28.79%
BHARATFORG26,29,500763.75-2.44%24.99%
(Increase in open interest and decrease in price)
52-week highs
Seven stocks in the BSE 500 index -- the broadest gauge on the bourse -- clocked 52-week highs: IndusInd Bank, Godfrey Phillips, Minda Corp, TTK Prestige, Tanla, ABB and Grindwell.
52-week lows
Three stocks in the 500-strong barometer hit 52-week lows: AstraZeneca, Strides Pharma Science and Responsive Industries.
Volatility gauge
NSE's India VIX index — which gauges the expectation of volatility in the near term — rose 6.4 percent to settle at 17.9 on Thursday, having surged as much as 9.5 percent during the session.
Note To Readers

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