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Trade setup for Oct 8: Nifty50 to stay rangebound before RBI policy? Key market cues before Friday’s session

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Nifty50 is consistently taking support near its 20-day simple moving average but witnessing profit booking near 17,900, says Shrikant Chouhan of Kotak Securities. Here's how the coming session is poised to start on Dalal Street.

Trade setup for Oct 8: Nifty50 to stay rangebound before RBI policy? Key market cues before Friday’s session
Indian shares resumed their upmove on Thursday after a day's breather propelled by buying across sectors, as investors' appetite for risk improved globally. Sharp gains in auto, IT, consumer and select financial shares powered the market, with strong buying interest in heavyweights such as Titan, TCS and ICICI Bank.
All eyes are now on the outcome of the RBI's policy review due on Friday.
What do the charts suggest for Dalal Street?
The Nifty50 index has formed an inside body pattern following a strong bearish candle, suggesting indecisiveness between the bulls and the bears, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
The 50-strong gauge is consistently taking support near its 20-day simple moving average but also witnessing profit booking near 17,900.
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Watch out, traders!
The market remains choppy and rangebound, so traders should avoid taking positions in either direction unless 17,950 is conquered on the upside or 17,400 breaks on the downside, said Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments.
For day traders, 17,720 would be a key level to watch out for, said Chouhan.
Here are key things to know about the market before Friday's session:
SGX Nifty
At 8:02 am on Friday, Nifty futures trading on Singapore Exchange -- an early indicator of the Nifty50 index -- were up 39 points or 0.2 percent at 17,854.5, suggesting a mildly positive start ahead on Dalal Street.
Global markets
Equities in other Asian markets rose on Friday as Chinese shares returned from a one week holiday upbeat. Investors eyed key US jobs data for any fresh insight into the timing of the Federal Reserve's tapering of stimulus. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent, having rallied 2.1 percent the previous day in its biggest single-day jump since August. Japan's Nikkei 225 index was up 2.2 percent. China's Shanghai Composite gauge rose 0.8 percent.
S&P 500 futures were up 0.2 percent in early Asian trade, suggesting a positive start ahead on Wall Street. On Thursday, the three main US indices rose 0.8-1.1 percent.
What to expect on Dalal Street
The Nifty50 index has to hold above 17,777 for an upmove towards 17,900 and 17,947 levels, with support seen at 17,650 and 17,580, said Chandan Taparia, Vice President, Equity Derivative and Technical, Broking and Distribution, Motilal Oswal Financial Services.
Rahul Sharma, Co-Founder of Equity99, does not expect a rate change in the upcoming RBI policy but warns the central bank may pull out surplus liquidity. Investors should book partial profits and keep a bit of cash balance in hand, said Sharma, who expects banking, telecom, metal and energy spaces to be in focus on Friday.
Key levels to watch out for
Nifty50: Sharma expects major resistance for the index at 17,885-17,950-18000 levels, and support at 17,725, followed by the 17650-17600 zone.
Bank Nifty: The banking index is expected to meet resistance at 38,100-38,350 levels, whereas major support comes in at 37,500-37,350, he said.
FII/DII activity
Foreign institutional investors (FIIs) pulled out a net Rs 1764.3 crore from Indian equities on Thursday. However, domestic institutional investors (DIIs) made net purchases of Rs 2528.6 crore, exchange data showed.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 18,000. On the other hand, the maximum put open interest is at 17,400, NSE data shows. This suggests Mount 18,000 as the next hurdle, and support comes in only at 17,400.
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 (%)
CIPLA1,02,14,1009200.58%17.00%
TATAMOTORS9,23,31,450380.213.07%16.92%
ULTRACEMCO17,46,7007,393.950.14%14.72%
BATAINDIA18,16,6501,957.607.02%14.08%
IPCALAB6,84,9002,351.403.44%13.37%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
ONGC6,03,44,900161.2-4.30%-4.90%
PNB30,84,32,00039.85-0.50%-1.16%
NATIONALUM10,15,75,00096.8-0.26%-0.75%
DEEPAKNTR27,60,5002,888.50-0.30%-0.69%
JINDALSTEL4,01,12,500408.95-0.54%-0.33%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
AUBANK46,24,5001,2110.47%-3.54%
GODREJCP53,25,0001,0341.49%-3.06%
IBULHSGFIN4,18,28,300244.751.35%-3.05%
MCDOWELL-N1,55,62,5009063.32%-2.87%
LUPIN1,09,27,600959.21.22%-2.74%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
INDUSTOWER1,19,56,000301-3.37%31.26%
ALKEM4,18,0003,940-0.20%12.82%
DALBHARAT2,74,2502,094.90-0.29%7.66%
HINDUNILVR54,00,6002,671.15-0.33%7.38%
NESTLEIND2,72,55019,085.05-0.77%7.23%
(Increase in open interest and decrease in price)
52-week highs
Indian Oil, Titan, Tata Motors, Tata Elxsi, Tata Chemicals and Voltas were among the 49 stocks in the BSE 500 universe that clocked 52-week highs. ONGC, NHPC, PVR, Raymond, TeamLease, Bosch, IRCTC, Godrej Properties and Bata also hit the milestone. 
52-week lows
While no stock in the broadest index on the bourse hit a 52-week low, Triveni Enterprises, and Bhakti Gems and Jewellery were among the few others that hit the trough.
Volatility gauge
NSE's India VIX index — which measures the expectation of volatility in the near term — eased 6.8 percent to 16.2 on Thursday -- its lowest closing level since September 17.
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