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This article is more than 1 month old.

Trade setup for Sept 20: More weakness ahead for Nifty50? Key market cues before Monday's session

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Though Nifty50's long-term uptrend remains intact, some weakness could be expected ahead, which can be considered a buying opportunity, says Nagaraj Shetti of HDFC Securities. Here's how the September 20 session is poised to start.

Trade setup for Sept 20: More weakness ahead for Nifty50? Key market cues before Monday's session
Indian equity benchmarks took a breather on Friday after breaking a series of records, though managed to post their fourth straight weekly gains. The Nifty50 index held the 17,550 mark, helped by renewed buying interest in the financial basket after the government's clearance to the country's first 'bad bank'.
So, what do the charts suggest for Dalal Street?
The 50-scrip index formed a small negative candle on the daily chart with a long upper shadow, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
Follow-through weakness will confirm the formation of a reversal pattern. Such negative patterns tend to occur during strong uptrend moves and often get nullified in the subsequent sessions, he said.
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'Better safe than sorry'
The market trend looks extremely strong but the current move is not offering comfort at all, said Sameet Chavan, Chief Analyst - Technical and Derivatives at Angel Broking.
"We reiterate that the market surprises when things start to look hunky dory and there are no signs of correction. It is difficult to predict the precise time, but it is always better to be safe than sorry. As of now, we are not advising to go short but at least one can choose to keep booking profits on regular intervals and stay light on positions," he said.
Here are key things to know about the market before Monday's session:
SGX Nifty
At 8:06 am on Monday, Nifty futures trading on Singapore Exchange -- an early indicator of India's Nifty50 benchmark index -- were down 159.5 points or 0.9 percent at 17,442, suggesting a gap-down start ahead on Dalal Street.
Global markets
Equities in other Asian markets fell on Monday ahead of a week packed with no less than a dozen central bank meetings. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.4 percent, after shedding 2.5 percent last week, amid thin trade as the Japanese, Chinese and South Korean markets were closed for a holiday.
S&P 500 E-Mini futures were down 0.6 percent in early Asian trade. All eyes were on the US central bank, which is likely to take another step toward tapering in a policy meeting on Tuesday and Wednesday.
What to expect on Dalal Street
The long-term uptrend remains intact in Nifty, and minor consolidation this week could be a buying opportunity. Profit booking seems to have started along with volatility at new highs, and there is a possibility of consolidation or minor weakness in the coming sessions, according to HDFC Securities' Shetti.
Key levels to watch out for
Nifty50: Chavan expects immediate hurdles for the 50-scrip index at 17,700-17,800 levels, and key support in the 17,450-17,250 band. "The first sign of real weakness would come only if the index starts sliding below the lower range," he said.
Bank Nifty: The banking space has had a lion share in the last three days, as Bank Nifty made a comeback following a long slumber. If Nifty has to move towards 18,000, the banking space needs to continue its momentum after recent record highs, according to Chavan. He sees key support for the banking index at 37,400-37,000 and strong hurdles at 38,200 and 38,500.
FII/DII activity
Foreign institutional investors (FIIs) brought in a net Rs 1,552.6 crore into the Indian capital market on Friday. However, net sales by domestic institutional investors (DIIs) stood at Rs 1,398.6 crore, exchange data showed.
Call/put open interest
There is a high degree of call open interest at the strike prices of 17,800 and 18,000. On the other hand, a large amount of put open interest is concentrated at 17,500 and 17,400, NSE data shows.
This suggests that immediate resistance can be expected at 17,800, and support comes in at 17,500, and next at 17,500.
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 (%)
IRCTC13,91,6503,8802.73%69.31%
INDIGO27,99,0002,199.8011.04%38.05%
IDEA54,41,80,00011.551.76%8.71%
POLYCAB6,10,8002,5323.53%7.61%
HAL15,69,4001,436.150.01%6.30%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
ONGC6,07,68,400128-0.93%-13.87%
IOC4,93,67,500118.15-0.46%-13.30%
NAM-INDIA37,18,400438.9-0.76%-12.99%
HINDUNILVR80,73,0002,745.05-0.86%-8.62%
INDIAMART2,72,6258,591.35-2.12%-8.36%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
PFC2,81,41,800137.950.84%-11.24%
KOTAKBANK1,51,84,0002,006.605.22%-9.19%
LT1,39,87,4501,721.650.04%-7.49%
BAJAJ-AUTO31,18,0003,8350.42%-6.56%
MINDTREE22,40,0004,1970.47%-6.52%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
NAVINFLUOR4,98,3753,880.40-4%44.06%
LALPATHLAB4,90,5003,995.45-2.57%10.24%
INDHOTEL1,06,47,000149.2-4.05%8.97%
UBL14,66,5001,597.05-0.27%7.26%
TATASTEEL4,18,66,7501,385.85-3.60%7.23%
(Increase in open interest and decrease in price)
Stocks hitting 52-week highs
SBI, Axis Bank, Bajaj Finance, Bajaj Finserv, Indian Oil, Coforge, IndiGo, Havells, Larsen & Toubro, Titan, Voltas and Tata Elxsi were among the 40 stocks in the BSE 500 index — the broadest index on the bourse — that clocked 52-week highs.
Deepak Nitrite, DMart, IRCTC, Bajaj Holdings, Bajaj Electricals, Allcargo, Persistent Systems, L&T Infotech, VIP Industries and Zydus Wellness also hit the milestone.
52-week lows
No stock in the BSE 500 universe logged a 52-week low. Apart from that, Suvidhaa Infoserve, Aashka Hospitals and Krsnaa Diagnostics were among the few stocks that hit the trough.
Volatility gauge
NSE's India VIX index -- which gauges the expectation of volatility in the market --  spiked 5.7 percent to 15.2 on Friday, having risen as much as 8.6 percent during the session.
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