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Trade setup for Sept 6: Will bulls continue to dominate D-Street? Key market cues before Monday's session

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As the 50-scrip benchmark Nifty takes out the 17,300 mark decisively, what's in store for Dalal Street ahead? Here's how the September 6 session is poised to start.

Trade setup for Sept 6: Will bulls continue to dominate D-Street? Key market cues before Monday's session
Indian equity benchmarks raced to fresh peaks on Friday led by strong buying interest in heavyweight Reliance Industries, as global equities logged cautious gains ahead of US employment data. Gains in oil & gas, consumer durables and automobile stocks also kept investors in an upbeat mood on Dalal Street.
So, what do the charts suggest for Dalal Street?
The index formed a reasonable positive candle on the daily chart at all-time highs, indicating a sharp uptrend continuation pattern, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
He expects further upside in the short term. "Though Nifty is placed near the swing highs, still there is no indication of any tiredness or reversal pattern unfolding, which is a positive sign," he said.
Be watchful of valuations
"The market is likely to continue with its positive momentum as economic recovery and vaccinations continue their northward journey. Technically, Nifty indicates a complete dominance by the bulls to drive the next momentum," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Strong liquidity and positive global cues are likely to support the market to continue scaling new highs, though valuations are also moving beyond the comfort zone. "Valuations could lead to bouts of profit booking and an increase in volatility. Large caps offer a better margin of safety in the current environment and could continue to remain in focus in the near term," he said.
Here are key things to know about the market before Monday's session:
SGX Nifty
At 8:08 am on Monday, Nifty futures trading on Singapore Exchange -- an early indicator of India's Nifty50 benchmark index -- were up 30.5 points or 0.18 percent at 17,390, signalling a positive start ahead on Dalal Street.
Global markets
Equities in other Asian markets shares started Monday on a mixed note following a disappointing US payrolls report. MSCI’s broadest index of Asia-Pacific shares outside Japan was flat in early trade, Japan’s Nikkei was up 1.7 percent and South Korea's KOSPI down 0.1 percent. S&P 500 E-Mini futures were down 0.08 percent. Wall Street will remain closed on Monday for a holiday.
The US employment data missed consensus by a mile, raising fears about the pace of economic recovery but weakened the argument for near-term tapering. Fed Chairman Jerome Powell has hinted recently that reaching full employment is a prerequisite for the US central bank to start paring back its stimulus.
What to expect on Dalal Street
HDFC Securities' Shetti expects intraday volatility at higher levels in the coming sessions. He said the index's short-term trend remains positive with the upside momentum at its high.
There is a possibility of further upside in Nifty this week towards 17,500-17,600 levels. Crucial supports are placed around 17,260 and 17,200, he added.
Key levels to watch out for
Nifty50: Immediate hurdles are expected at 17,400-17,500 levels are to be considered immediate hurdles, where one would need to avvoid being complacent, said Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking. He said key support comes in at 17,200-17,050 levels this week. "The first sign of weakness would start below 17,000, after which, the crucial make-or-break support zone of 16,700-16,600 would be tested."
Nifty Bank: The banking index continues to underperform and is finding difficulty in crossing the 37,000 mark. "Let’s see whether it manages to move beyond this or not clock new highs. Until then, consider the 37,000-36,000 band as the immediate range," according to Chavan.
FII/DII activity
Net inflow by foreign institutional investors into the Indian capital market stood at Rs 768.58 crore on Friday, and that by domestic institutional investors was at Rs 668.6 crore, exchange data showed.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,500. On the other hand, the maximum put open interest is at the strike price of 17,200, and then 17,100, NSE data shows. This indicates that resistance can be expected at 17,500, and support comes in at 17,200 followed by 17,100.
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 (%)
MCX10,59,8001,607.603.58%63.71%
OFSS2,02,5004,754.800.35%29.81%
NATIONALUM8,97,94,00092.84.39%14.07%
ONGC5,03,50,300122.14.14%13.30%
BEL2,46,08,800199.054.74%11.10%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
CUMMINSIND25,54,2001,025-1.63%-7.96%
IBULHSGFIN3,90,87,900230-1.18%-4.93%
JUBLFOOD14,90,5004,110.80-0.15%-3.20%
NAUKRI10,18,1256,199.50-1.51%-3.07%
TRENT14,16,650996.45-0.80%-2.92%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
TVSMOTOR52,79,400540.51.71%-12.01%
COALINDIA4,90,51,800147.353.77%-5.93%
POLYCAB4,13,7002,235.150.95%-5.80%
UBL17,68,9001,573.500.51%-5.54%
HEROMOTOCO46,55,1002,8052.61%-5.38%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
IEX53,06,250543.1-4.57%21.60%
DIXON2,85,6254,257.50-1.25%21.01%
AARTIIND32,79,300912.45-1.36%17.76%
CANFINHOME14,35,200585.55-0.52%17.26%
ASHOKLEY3,98,20,500121.2-0.70%15.17%
(Increase in open interest and decrease in price)
Stocks hitting 52-week highs
Nearly 50 stocks in the BSE 500 index — the broadest index on the bourse — clocked 52-week highs, including Reliance Industries, SBI Life, Adani Transmission, HUL, Havells, IRCTC, Asian Paints, BPCL, Dabur, Britannia, IndiGo, ICICI Prudential Life Insurance, UltraTech, Titan and Tata Consumer. SRF, Trident, Mindtree, Larsen & Toubro Infotech, L&T Technology Services, Persistent, Godrej Consumer Products, Deepak Nitrite, Sobha, Cummins, Century Textiles, Blue Dart, VIP Industries, Jubilant FoodWorks, Carborundum Universal, Bharat Electronics and Allcargo Logistics also hit the milestone.
Stocks hitting 52-week lows
Not a single stock in the BSE 500 universe hit a 52-week low, though outside the 500-strong club, Dodla Dairy, Aashka Hospitals, Madhav Infra Projects, and Premier Capital Services are among the few stocks that hit 52-week lows.
Volatility gauge
The India VIX index — which measures the expectation of volatility in the market — rose 2.12 percent to 14.24 on Friday, having gained as much as 2.88 percent during the session.