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Trade setup for May 23: Is Nifty50 in for more of a bumpy ride?

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Trade setup for May 23: Is Nifty50 in for more of a bumpy ride?

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Trade setup for Monday, May 23: The Nifty may continue to rise as long as it holds 16,400, say experts. Here's what the technical charts suggest.

Trade setup for May 23: Is Nifty50 in for more of a bumpy ride?
Indian equity benchmarks rose sharply on Friday amid gains across sectors following two days of losses tracking mixed moves across global markets, as worries about worsening inflation and receding global growth kept investors cautious.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a double bottom around 15,735 on the daily chart, according to Subash Gangadharan, Senior Technical and Derivative Analyst at  HDFC Securities.
Gangadharan expects a move above the recent swing high of 16,400 to lead to further upsides this week. He warns that the intermediate trend remains negative though he is open to pullback rallies in the very near term. 
Market not out of the woods
Solid support continues to be at 15,700-15,600 levels which coincide with the 50-scrip index's 89-day exponential moving average on the weekly chart, Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, told CNBCTV18.com. "We are not completely out of the woods but at least well above the crucial support zone," he said.
On the other hand, he sees a cluster of resistance around the 16,400-16,500-16,600 band. One should avoid being complacent unless these levels are crossed, he said.
"We are clearly mirroring US market sentiments and hence, if the market has to move higher, global relief is the key... One should certainly be prepared for surprising moves on either sides," he added.  
Here are key things to know about the market before the May 23 session:
SGX Nifty
Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — rose as much as 125 points or 0.8 percent to 16,379.5 ahead of the opening on Dalal Street on Monday.
Global markets
Equities in other Asian markets were largely weaker on Monday, as persistent worries about inflation and rising interest rates dogged the global economic outlook. MSCI's broadest index of Asia Pacific shares outside Japan was down half a percent in early hours.
Hong Kong's Hang Seng down 0.9 percent and China's Shanghai Composite flat. South Korea's KOSPI was down 0.1 percent and Singapore's Straits Times 0.2 percent. Japan's Nikkei 225 was up 0.4 percent.
S&P 500 futures held up 0.7 percent. On Friday, Wall Street indices were a mixed bag in a volatile session that saw Tesla slump and other growth stocks lose ground. The S&P 500 and the Dow Jones finished barely up and the tech stocks-heavy Nasdaq Composite declined 0.3 percent.
What to expect on Dalal Street
Gangadharan pointed out that the 20-period moving average on the 15-minute chart has moved above the 50-period level, a positive moving average crossover.
"A further up move is likely once immediate resistance at 16,355 is taken out... The bears would gain more control once the recent intermediate low of 15,735 is broken. Till then, enjoy the rally till it lasts," he said.
Important levels to watch out for
Both Nifty50 and Nifty Bank are below their long-term simple moving averages though above their five- and 10-day levels.
PeriodMoving average
Nifty50Nifty Bank
516,083.533,931.1
1016,071.733,976
2016,513.534,904.2
5016,949.435,722.6
10017,157.136,474.3
20017,258.636,864.9
Palak Kothari, Research Associate at Choice Broking, pointed out key support and resistance levels:
IndexSupportResistance
Nifty16,00016,410
Nifty Bank33,20034,800
FII/DII activity
Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,000, with 1.5 lakh contracts, and 16,300, with almost 96,500 contracts, according to exchange data. On the other hand, the maximum put open interest is at 16,000, with 1.5 lakh contracts, and 15,800, with 1.1 lakh contracts.
This indicates immediate resistance at 16,300 followed by the 17,000 hurdle, and immediate support at 15,800 followed by a strong cushion at 16,000.
Long build-up
Here are five stocks that saw an increase in open interest as well as price:
StockCurrent OICMPPrice change (%)OI change (%)
RAMCOCEM23,17,100685.70.65%11.74%
HDFCAMC36,61,2001,711.250.37%5.13%
BATAINDIA13,12,8501,7551.04%5.11%
PERSISTENT3,71,5503,703.602.54%3.63%
BHEL10,15,03,50053.558.40%3.19%
Long unwinding
StockCurrent OICMPPrice change (%)OI change (%)
ATUL1,58,6258,228.95-0.07%-9.27%
SHREECEM2,13,10021,839.95-0.86%-7.26%
DEEPAKNTR10,99,7501,972.05-0.31%-4.93%
AMBUJACEM4,60,57,500363.8-0.12%-4.55%
NAVINFLUOR3,40,2003,790-0.05%-4.37%
(Decrease in open interest as well as price)
Short covering
StockCurrent OICMPPrice change (%)OI change (%)
ADANIENT1,88,52,0002,231.555.50%-18.86%
HDFCBANK6,86,32,3001,326.903.15%-18.13%
SRTRANSFIN41,94,4001,097.602.04%-17.97%
METROPOLIS4,88,4001,7682.57%-16.95%
TATASTEEL2,51,12,4001,170.454.14%-16.00%
(Increase in price and decrease in open interest)
Short build-up
StockCurrent OICMPPrice change (%)OI change (%)
GODREJCP54,69,000760.65-4.43%0.93%
UPL2,01,52,600809.75-0.31%0.03%
(Decrease in price and increase in open interest)
52-week highs
Five stocks on the BSE 500 — the broadest index on the bourse — hit 52-week highs: ITC, Hindustan Aeronautics, ESAB, KSB and Welspun Corp.
52-week lows
Five scrips hit 52-week lows: Concor, Firstsource, Honeywell Automation, Indostar Capital and Supreme Industries.
Fear gauge
The India VIX — known in market parlance as the fear index — eased 5.9 percent to settle at 23.1 on Friday.
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