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Trade setup for May 20: As wild swings continue, can Nifty50 retest 15,500 soon?

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Trade setup for May 20: As wild swings continue, can Nifty50 retest 15,500 soon?

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Trade setup for Friday, May 20: The Nifty50 appears to be in a downtrend though pullback rallies are possible up ahead, say experts. Here's what the technical charts suggest.

Trade setup for May 20: As wild swings continue, can Nifty50 retest 15,500 soon?
Indian equity benchmarks took a big knock on Thursday their worst single-day loss in more than two months mirroring a sell-off across global markets, as investors fretted about worsening inflation and its impact on the world economy.
Weakness across sectors pulled the headline indices lower, with IT, financial, oil & gas and auto shares being the biggest drags on the main indices.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a bearish candle on the daily chart, hinting at more weakness ahead, according to Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities. 
"A quick pullback rally is not ruled out if the 50-scrip index succeeds to trade above 15,700," he said.
All eyes on key support
On the 15-minute chart, the 20-period moving average is below the 50-period one, which is a negative moving average crossover, said Subash Gangadharan, Senior Technical and Derivative Analyst at HDFC Securities. He sees the possibility of a fresh downward move once support at 15,735 is compromised.
"The daily timeframe also gives a weak outlook for the coming sessions," said Gangadharan, who remains open to pullback rallies in the very near term but expects the downtrend to continue.
Here are key things to know about the market before the May 20 session:
SGX Nifty
Singapore Exchange (SGX) Nifty futures rose as much as 223.5 points or 1.4 percent to 16,008.5 early on Friday, suggesting a gap-up opening ahead on Dalal Street.
Global markets
Equities in other Asian markets jumped, shrugging off a weak session on Wall Street overnight, after China cut a key lending benchmark to support a slowing economy. MSCI's broadest index of Asia Pacific shares outside Japan was up 1.2 percent in early hours.
Japan's Nikkei 225 and Singapore's Straits Times were up 1.2 percent each, China's Shanghai Composite 0.7 percent, Hong Kong's Hang Seng 1.7 percent and South Korea's KOSPI 1.8 percent.
S&P 500 futures were up 0.8 percent. On Thursday, US stocks finished a volatile session lower after a dismal outlook by Cisco. The S&P 500 fell 0.6 percent, the Dow Jones 0.8 percent and the Nasdaq Composite 0.3 percent.
What to expect on Dalal Street
For traders, the correction wave is likely to continue in the Nifty50 until it is below 15,900, in which the index could retest 15,700 and even 15,600, said Chouhan. Once above 15,900, the gauge could move up to 16,000-16,100 levels, he said. 
Important levels to watch out for
The Nifty50 and the Nifty Bank are below all of their six main moving averages in a bearish sign.
PeriodMoving average
Nifty50Nifty Bank
515,986.733,700
1016,086.234,007.5
2016,569.835,031.2
5016,941.435,694.5
10017,165.236,483.4
20017,256.236,866.9
FII/DII activity
Call/put open interest
The maximum call open interest is accumulated at the strike price of 15,900 with 1.1 lakh contracts, and the next highest at 16,200 and 16,000, with one lakh each, according to exchange data. On the other hand, the maximum put open interest is at 15,500, with 1.5 lakh contracts, and 15,800, with 1.2 lakh.
This indicates immediate resistance at 15,900 before the 16,000 hurdle, and immediate support after 15,800 at 15,500.
Long build-up
Here are five stocks that saw an increase in open interest as well as price:
StockCurrent OICMPPrice changeOI change
DRREDDY24,51,0003,9450.69%11.19%
TVSMOTOR75,65,600682.050.04%5.51%
PIIND15,70,7502,673.151.90%4.12%
CUB1,05,19,600125.150.24%3.98%
AMBUJACEM4,62,37,500364.10.64%1.99%
Long unwinding
StockCurrent OICMPPrice changeOI change
COROMANDEL15,01,875912.5-2.19%-7.70%
DELTACORP1,60,24,100226.5-0.59%-6.76%
GSPL19,32,900263.95-1.01%-4.75%
HONAUT11,74531,992.75-1.69%-3.45%
IDEA59,34,60,0008.9-3.78%-2.69%
(Decrease in open interest as well as price)
Short covering
StockCurrent OICMPPrice changeOI change
ITC8,72,25,600269.83.10%-7.99%
METROPOLIS5,27,4001,730.501.38%-1.40%
HAL21,88,3251,6980.80%-0.46%
ABBOTINDIA27,57518,088.651.38%-0.09%
(Increase in price and decrease in open interest)
Short build-up
StockCurrent OICMPPrice changeOI change
MANAPPURAM2,47,32,00094.75-9.63%18.16%
PERSISTENT4,16,1003,621.25-6.19%17.74%
TCS74,73,1503,247.50-5.31%12.76%
SRTRANSFIN42,79,2001,072.45-2.19%10.67%
MUTHOOTFIN29,54,2501,155.65-2.53%9.71%
(Decrease in price and increase in open interest)
52-week highs
Two stocks on the BSE 500 — the broadest index on the bourse — hit 52-week highs: ITC and Mangalore Refinery.
52-week lows
Three Sensex stocks — HDFC Bank, Nestle and Wipro — were among the 33 scrips on the BSE 500 basket that hit 52-week lows.
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ASTRALHDFCAMCOFSS
AUROPHARMAHINDPETROORIENTELEC
BPCLHONAUTROUTE
CAMSKANSAINERSUNTV
CANFINHOMELALPATHLABSUPREMEIND
CROMPTONLUPINTASTYBIT
CSBBANKMANAPPURAMTHYROCARE
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Fear gauge
The India VIX — known in market parlance as the fear index — surged 10.2 percent to settle at 24.6 on Thursday, its biggest jump since April 25.
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