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Trade setup for Sept 7: More upside for Nifty in holiday-shortened week? Key market cues before Tuesday's session

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Analysts say the long-term charts suggest more upside for Nifty this week though minor correction cannot be ruled out. Here's how the September 7 session is poised to start.

Trade setup for Sept 7: More upside for Nifty in holiday-shortened week? Key market cues before Tuesday's session
Indian equity benchmarks clocked a second straight day of record closing highs on Monday, helped by IT and consumer goods stocks, and a record high on heavyweight Reliance Industries. Nifty Bank could not sustain intraday gains and ended half a percent lower.
So, what do the charts suggest for Dalal Street?
The index formed a small negative candle with minor upper and lower shadows, signalling a spinning top type of pattern at highs, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. Any reasonable decline on Tuesday could signal minor downward correction in the market, he said.
He also said the long-term charts are intact and suggest more upside for the remainder of the holiday-shortened week.
Crucial support at 17,300 
Nifty50 appears to have crucial near-term support near 17,300, said Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas. As long as it trades above this level, its short-term trajectory is expected to remain positive, and the index can head towards 17,500-17,630 in the short term, he said.
Here are key things to know about the market before Tuesday's session:
SGX Nifty
Nifty futures trading on Singapore Exchange -- an early indicator of India's Nifty50 benchmark index -- were up 5 points at 17,424 at 8:17 am, hinting at a flat start ahead on Dalal Street.
Global markets
Asian stocks largely moved higher on Tuesday as Japanese equities hit a five-month peak on expectations that the country’s new prime minister could spur a recovery with improved measures to tackle the pandemic and its economic impact. MSCI's broadest index of Asia Pacific shares outside Japan was up 0.16 percent in early trade, and Japan's Nikkei 225 benchmark up 0.79 percent. S&P 500 E-Mini futures were up 0.13 percent, indicating a positive start ahead on Wall Street following a holiday.
What to expect on Dalal Street
Any dip towards the support levels of 17,300-17,200 will present a fresh buying opportunity for traders, according to Rohit Singre, Senior Technical Analyst at LKP Securities. If Nifty50 manages to hold above those levels, the current upmove may extend to towards a strong hurdle of 17,500 where traders can lock gains, he said.
If it manages to sustain above the 17,500 zone, new doors will open for the 18,000 mark, he said.
HDFC Securities' Shetti also said the short-term trend for the index continues to be positive. Though the index has formed a small range candle, there is no immediate threat to a short-term upside, he added.
Key levels to watch out for
Nifty50: The index has strong support at 17,300, which, if breached, could be followed by 17,225 and then 17,100, according to Rahul Sharma, Co-Founder of Equity99. On the other hand, a hurdle is at 17,500, he said, and if the index takes out 17,500 on a closing basis, then 17,800 will act as next resistance.
Nifty Bank: The banking index has strong support at 36,500-36,200 levels. On the upside, the 37,200 level is expected to act as a hurdle for Nifty Bank, which, once crossed on a closing basis, may be followed by a stretch expected to take the index to all-time highs above 38,000, Sharma said.
FII/DII activity
Net outflow by foreign institutional investors from the Indian capital market stood at Rs 589.36 crore on Monday, and net purchases by domestic institutional investors were at Rs 547.31 crore, exchange data showed.
Call/put open interest
There is a high degree of call open interest at the strike price of 17,500. On the other hand, the maximum put open interest is at the strike price of 17,300, and next only at 17,000, NSE data shows. This indicates that resistance can be expected at 17,500, and support comes in at 17,300 followed by 17,000.
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 (%)
INDIAMART1,47,0759,02610.67%40.80%
OFSS2,62,8754,8481.69%21.87%
PVR19,91,8581,381.302.72%20.96%
NATIONALUM10,24,25,00098.756.01%18.32%
POLYCAB3,89,7002,3304.40%17.09%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
INDUSTOWER1,32,88,800224.7-0.42%-2.65%
ONGC5,70,49,300120-1.48%-2.02%
BEL2,73,41,000194.7-1.89%-1.96%
SUNPHARMA3,52,18,400784-0.78%-1.35%
TORNTPHARM8,23,7503,140.90-1.61%-1.34%
(Decrease in open interest and price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
UBL16,70,9001,582.100.42%-5.32%
MANAPPURAM2,48,28,000169.153.08%-2.61%
PETRONET2,13,12,000231.70.43%-1.87%
LUPIN97,87,750986.41.51%-1.86%
DIXON3,45,6254,2930.84%-1.84%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
HAL12,73,9501,361.55-2.60%16.85%
ICICIGI19,49,9001,569.95-3.99%13.71%
SRF5,80,12510,281.70-0.84%9.11%
GUJGASLTD27,30,000688.75-1.80%8.52%
POWERGRID2,90,86,182172-0.61%7.52%
(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, TCS, Wipro, Titan, Voltas, UltraTech, HCL Tech, Hindalco, Hindustan Unilever, Havells, ACC, Adani Transmission, Ambuja Cements, Asian Paints and Bharat Petroleum. Brigade, Britannia, Tata Consumer, Century Textiles, Cummins, Dabur, Blue Dart, IRCTC, Nalco, Mindtree, Mphasis, Nestle, Trident, Varun Beverages, Persistent, Prestige and SRF 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, Rolex Rings, Suvidhaa Infoserve, Aashka Hospitals, Premier Capital Services and Triveni Enterprises 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 3.9 percent to 15.1 on Monday, having spiked more than 5 percent during the session.