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Trade setup for July 19: Nifty50 could extend pullback to test 16,600 soon

Trade setup for July 19: Nifty50 could extend pullback to test 16,600 soon

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By Sandeep Singh  Jul 19, 2022 8:14:26 AM IST (Updated)

Trade setup for Tuesday, July 19: There may be more upside in the Nifty50, according to experts. Here's what the technical charts suggest:

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Indian equity benchmarks extended gains to a second straight session on Tuesday, backed by a rally across financial, IT and metal shares, amid a bounceback across global shares. Investors globally, however, remained cautious ahead of a key decision by the European Central Bank (ECB).
Corporate earnings remained in focus on Dalal Street, after HDFC Bank's quarterly performance fell short of analysts' estimates.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a long bull candle on the daily chart following a gap-up opening, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
"The short-term trend of the index continues to be positive," he said.
Firm support at 16,100-15-900
Momentum indicator RSI has given a positive crossover on the daily chart, confirming strength in the 50-scrip index, said Kunal Shah, Senior Technical Analyst at LKP Securities.
He expects the Nifty to test levels of 16,600-16,800 on the upside with lower-end support firm in the 16,100-15,900 zone.
Here are key things to know about the market ahead of the July 19 session:
SGX Nifty
Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — fell as much as 135 points or 0.8 percent to 16,155 ahead of the opening bell on Tuesday, suggesting a gap-down start ahead on Dalal Street.
Global markets
Equities in other Asian markets were largely in the red on Tuesday tracking weakness on Wall Street overnight. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.7 percent at the last count.
Japan's Nikkei was up 0.7 percent. China's Shanghai Composite was down 0.1 percent and Hong Kong's Hang Seng one percent.
S&P 500 futures were up 0.3 percent, suggesting a positive start ahead on Wall Street. On Monday, the three main US indices finished lower dragged by banking and Apple shares.
What to expect on Dalal Street
HDFC Securities' Shetti said one may expect further upside in the Nifty in the short term.
"The next upside levels to be watched are around 16,500-16,600 in the near term. Immediate support is placed at 16,200," he said.
Important levels to track
The Nifty50 is about six percent below its long-term simple moving average (SMA).
Period (No. of sessions)SMA
Nifty50Nifty Bank
516,045.8
34,952.7
1016,021.834,688.9
2015,844.534,003.1
5016,02734,229.4
10016,543.835,157.5
20017,080.636,461.7
Mohit Nigam, Head-PMS at Hem Securities, has identified the following levels to watch out for:
IndexSupportResistance
Nifty5015,20016,400
Nifty Bank35,00035,800
FII/DII activity
In contrast to the trend seen on Dalal Street, foreign institutional investors (FII) emerged net buyers on Monday. According to provisional exchange data, FIIs made net purchases of Rs 156.1 crore for the day.
Domestic institutional investors — which have been filling some of the gap created by sustained FII outflows for the past more than nine months — net bought shares worth Rs 844.3 crore on July 18.
Call/put open interest
The maximum call open interest is accumulated at the strike prices of 16,500 and 16,600, with 1.1 lakh contracts each, according to exchange data. The maximum put open interest is at 16,000, with 1.3 lakh contracts, and the next highest at 16,200, with 1.2 lakh.
This suggests major resistance at 16,500 and immediate support at 16,200 before a strong cushion at the 16,000 mark.
Long build-up
Here are five stocks that saw an increase in open interest as well as price:
StockCurrent OICMPPrice changeOI change
PERSISTENT565,5003,2663.53%27.88%
AUBANK5,824,000556.451.12%21.77%
BEL27,048,400255.253.80%15.45%
COFORGE682,0503,4251.92%15.33%
FEDERALBNK77,340,000101.654.58%14.03%
Long unwinding
StockCurrent OICMPPrice change (%)OI change (%)
CROMPTON3,964,500392.85-0.39%-3.63%
PVR2,230,7671,912.55-0.91%-1.11%
MARUTI4,259,8008,745.90-0.46%-1.09%
WHIRLPOOL562,1001,695.80-0.24%-0.81%
M&M14,957,6001,161.10-0.36%-0.49%
(Decrease in open interest as well as price)
Short covering
StockCurrent OICMPPrice changeOI change
MINDTREE3,394,0002,9885.20%-6.26%
TCS14,637,7503,077.052.32%-4.18%
RBLBANK44,055,00086.355.18%-3.97%
TATASTEEL30,107,850907.42.50%-3.24%
VOLTAS4,127,5001,0365.40%-3.22%
(Increase in price and decrease in open interest)
Short build-up
StockCurrent OICMPPrice changeOI change
POLYCAB988,5002,144-0.09%21.40%
NAVINFLUOR414,0003,771.10-0.27%7.66%
ZYDUSLIFE11,399,400357.45-3.39%7.64%
CONCOR6,728,000671.75-1.94%6.29%
TRENT4,796,6001,213.60-0.10%6.11%
(Decrease in price and increase in open interest)
52-week highs
A total of nine stocks in the BSE 500 universe — the broadest index on the bourse — reached the milestone: Adani Enterprises, Eicher, Bharat Electronics, Blue Dart, Coromandel, Cummins, Gujarat Fluorochemicals, Siemens and Schaeffler.
52-week lows
As many as 20 stocks hit 52-week lows:
AMFLECSTSTLHIPOLINMEGLONSILVERPRL
ARYAVANESSARSHPNGINDOSTARPOLICYBZRSPRAYKING
BRFLGARMNTMNTRKRIINFRASEACOASTSPYL
CITIPORGAYAPROJMALSHASHIJITSUUMAYA
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