Trade setup for Sept 15: Time to prepare for a Nifty dip? Key market cues before Wednesday's session

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As Dalal Street surges to yet another record high, Shrikant Chouhan of Kotak Securities advises caution before Nifty crosses 17,450. Here's how the September 15 session is poised to start.

Trade setup for Sept 15: Time to prepare for a Nifty dip? Key market cues before Wednesday's session
Dalal Street surged to yet another record high on Tuesday led by select banking, automobile, IT and consumer stocks. Gains in heavyweights TCS, Kotak Mahindra Bank and L&T boosted the market, however losses in the HDFC twins kept the upside in check. Selling pressure in metal shares also played spoilsport.
The Nifty50 index surpassed its existing record closing high, but only by two points.
So, what do the charts suggest for Dalal Street?
The index formed a small negative candle on the daily chart, a sign that rangebound action in the market may continue, according to
Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
No sharp profit booking in the market signals lack of selling participation. However, the rangebound trend without intense selling could eventually result in an upside breakout in the coming sessions, he said.
Buy on dips
"We need to be cautious with short-term trading long positions until the index does not cross the 17,450 mark," said Shrikant Chouhan, Executive Vice President-Equity Technical Research at Kotak Securities.
Once below 17,450, the Nifty index may again fall to 17,300 or 17,250 levels. "The strategy should be to buy on dips between 17,300 and 17,250 levels with a stop loss at 17,230," he suggested.
Here are key things to know about the market before Wednesday's session:
SGX Nifty
Nifty futures trading on Singapore Exchange -- an early indicator of India's Nifty50 benchmark index -- were up 13.5 points or 0.1 percent at 17,404.5 at 8:01 am on Wednesday, suggesting a mildly positive start ahead on Dalal Street.
Global markets
Equities in other Asian markets fell on Wednesday, with MSCI's broadest index of Asia Pacific shares outside Japan down 0.4 percent in early trade, as investors worried about slowing global growth after weak Chinese economic data. Inflation in the US was at 0.1 percent last month, data showed, as against expectations of 0.3 percent, raising questions on when the Federal Reserve will begin tapering its bond buys. The data lifts some of the pressure the US central bank -- due to meet next week -- faced to announce it would begin tapering its massive stimulus.
On Wall Street, the three main indices fell 0.5-0.8 percent on Tuesday. S&P 500 E-Mini futures were up 0.1 percent in early Asian trade on Wednesday, pointing to a slightly positive start in the US ahead.
What to expect on Dalal Street
"Having formed a long bull candle in August, the odds of rangebound movement could be high in September. We are unlikely to see any decisive upmove and the upside breakout of this small range could find overhead resistance at the highs," said HDFC Securities' Shetti.
Auto stocks will be in focus on Wednesday, and broader markets are expected to continue their upmove this week, said Rahul Sharma, Co-Founder of Equity99. He also expects media, auto and banking stocks to be in the spotlight.
Key levels to watch out for
Nifty50: Sharma sees immediate support for the index at 17,300 and then 17,250-17,175, On the other hand, he sees resistance at 17,420, a level if taken out will take Nifty50 to 17,450-17,500 levels.
Bank Nifty: The banking index has strong support at 36,400, followed by 36,200-36,000 levels. Resistance is expected at 36,750, a crossover above which will be followed by the next resistance at 36,900-37,200, he said.
FII/DII activity
Foreign institutional investors (FIIs) pumped a net Rs 1,649.6 crore into the Indian capital market on Tuesday. However, net sales by domestic institutional investors (DIIs) stood at Rs 310.3 crore, exchange data showed.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,500, and the second highest only at 18,000. On the other hand, the maximum put open interest is at the strike price of 17,300, NSE data shows.
This indicates that immediate resistance can be expected at 17,500, and support comes in at 17,300.
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 (%)
IRCTC14,97,2753,7258.55%50.79%
IPCALAB2,07,4502,688.953.38%19.20%
ZEEL7,55,13,000262.2540.05%16.32%
IDEA75,00,50,0008.810%15.21%
PIIND10,43,0003,4901.20%13.23%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
SRF7,03,12510,674.65-0.37%-5.00%
EXIDEIND3,38,29,200182.85-0.81%-4.74%
LICHSGFIN2,34,36,000410.1-0.18%-4.15%
OFSS5,06,8754,838.60-0.73%-3.95%
METROPOLIS3,30,6003,075.75-0.12%-3.27%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
ICICIGI21,22,0251,609.45-1.66%16.16%
UBL13,49,6001,589.65-0.67%14.11%
ADANIENT1,67,44,0001,521.70-1.03%11.34%
MARICO1,02,32,000559.1-2.92%10.97%
INFY3,06,67,8001,686-0.36%8.12%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
SBILIFE1,06,92,7501,162.20-0.85%15.80%
GUJGASLTD35,95,000679.5-0.41%11.61%
SAIL15,84,22,000118.9-1.57%8.08%
TECHM99,10,2001,433.15-0.35%6.48%
DABUR1,06,78,750639.3-0.20%5.85%
(Increase in open interest and decrease in price)
Stocks hitting 52-week highs
More than 50 stocks in the BSE 500 index — the broadest index on the bourse — clocked 52-week highs, including TCS, HCL Tech, Hindalco, Bharti Airtel, Bharat Petroleum, Britannia, Nestle, Adani Transmission, Zee Entertainment, IGL, Coforge, Grasim and Havells. IRCTC, L&T Infotech, L&T Tech Services, Voltas, Mindtree, Naukri, Oil India, Zensar Tech, SRF, Teamlease and UBL also hit the milestone.
52-week low
Only one stock in the BSE 500 universe hit a 52-week low: Varroc Engineering.
Volatility gauge
The India VIX index, which measures the expectation of volatility in the market, eased 3.2 percent to 13.58 on Tuesday, having gyrated within a wide range of 10.87-14.03 during the session.