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Trade setup for May 24: Can Nifty50 defend 16,200 decisively?

Trade setup for May 24: Can Nifty50 defend 16,200 decisively?

Trade setup for May 24: Can Nifty50 defend 16,200 decisively?
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By Sandeep Singh  May 24, 2022 7:36 AM IST (Updated)

Nifty50 finds crucial support at 16,200, which, if broken, may lead to some correction, say experts. Here's what the technical charts suggest.

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Indian equity benchmarks failed to stay positive in a volatile session on Monday, dragged by losses in financial, metal, oil & gas shares though gains in auto, IT and consumer durables limited the downside.
Both headline indices slipped into the red despite holding up well above the flatline for much of the session.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a hammer candlestick pattern on the daily chart in a broadly negative sign, according to Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
He expects crucial support for traders at 16,200, a level below which he sees a quick intraday correction continuing till the 16,100-16,050 zone. On the contrary, a fresh uptrend is possible only after an intraday breakout above 16,300, which may lead to 16,400-16,475 levels, he said.
Time to be on the back foot
"Global headwinds are keeping the market on edge and the last leg of earnings is further adding to volatility," said Ajit Mishra, VP-Research at Religare Broking. He continues to hold a cautious view on Dalal Street.
Here are key things to know about the market before the May 24 session:
SGX Nifty
Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — gained as much as 61 points or 0.4 percent to 16,236.5 early on Tuesday, suggesting a positive start ahead on Dalal Street.
Global markets
Asian shares slipped on Tuesday as relief at a rally on Wall Street was quickly soured by a slide in US stock futures. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.2 percent.
Japan's Nikkei 225 was down 0.4 percent, and China's Shanghai Composite and Hong Kong's Hang Seng 0.2 percent each. South Korea's KOSPI was down 0.8 percent but Singapore's Straits Times eked out a gain of 0.2 percent.
S&P 500 futures slid 0.8 percent. On Monday, the three main US indices jumped led by banking stocks and a rebound in market-leading tech names. The S&P 500 rose 1.9 percent, the Dow Jones two percent and the Nasdaq Composite 1.6 percent.
What to expect on Dalal Street
Mishra suggests giving preference to hedged positions until the Nifty50 stages a decisive breakout from the 15,700-16,400 range.
Ruchit Jain, Lead Research at 5paisa.com, pointed out that Nifty50 is approaching the upper end of the 15,700-16,400 range, which coincides with its 20-day exponential moving average. If it fails to cross this hurdle, it could continue to consolidate within a broad range, he said.
Important levels to watch out for
Both Nifty50 and Nifty Bank are below their long-term simple moving averages, even as both are holding up above their five- and 10-day levels.
PeriodMoving average
Nifty50Nifty Bank
516,15834,061.1
1016,062.933,973.2
2016,465.634,814.3
5016,953.435,744.4
10017,149.236,468.2
20017,260.936,863.2
Jain sees intraday support for the index at around 16,130 and 16,043 and resistance around 16,272 and 16,358 on Tuesday.
FII/DII activity
Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,000, with more than two lakh contracts, and the next highest at 16,800, with 1.3 lakh contracts, according to exchange data. On the other hand, the maximum put open interest is at 16,000, with 1.5 lakh contracts, and the next highest at 15,000 and 15,500, with 1.1 lakh each.
This indicates immediate resistance at 16,800 followed by the 17,000 hurdle, and strong support 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 (%)
ABB3,51,7502,286.300.04%15.14%
PIIND16,12,2502,6370.42%14.86%
M&M1,03,87,300939.853.79%13.94%
METROPOLIS4,05,6001,769.501.18%11.39%
MPHASIS15,19,5252,514.952.11%11.23%
Long unwinding
StockCurrent OICMPPrice change (%)OI change (%)
INTELLECT8,74,500627.35-0.10%-24.36%
ATUL1,43,9258,106-1.46%-21.78%
RAMCOCEM25,89,100676-1.19%-19.44%
IRCTC1,22,22,875653.7-1.17%-18.28%
ABBOTINDIA26,22517,630.30-2.04%-17.73%
(Decrease in open interest as well as price)
Short covering
StockCurrent OICMPPrice change (%)OI change (%)
HDFCAMC38,49,2001,731.501.22%-22.55%
INDIAMART2,57,5504,277.550.29%-20.62%
APOLLOTYRE95,07,500216.450.05%-19.33%
LTTS8,71,8003,563.900.81%-18.61%
M&MFIN2,38,88,000171.750.56%-15.42%
(Increase in price and decrease in open interest)
Short build-up
StockCurrent OICMPPrice change (%)OI change (%)
ADANIPORTS6,24,91,250754.15-1.71%22.09%
GODREJPROP34,33,6251,315.85-2.39%7.56%
ULTRACEMCO18,48,5005,919.30-3.47%7.44%
BAJAJFINSV7,91,55012,566.10-0.26%7.42%
GAIL3,51,66,500152.8-2.15%6.09%
(Decrease in price and increase in open interest)
52-week highs
Six stocks on the BSE 500 — the broadest index on the bourse — hit 52-week highs: Adani Power, Mangalore Refinery, Hindustan Aeronautics, KSB, Ratnamani Metals and ESAB.
52-week lows
A total of 13 scrips hit 52-week lows.
HINDPETROORIENTELEC
HONAUTSAIL
INDOSTARSUPREMEIND
JSWSTEELTATASTEEL
LUPINTEAMLEASE
MANAPPURAMTHYROCARE
NMDC
Fear gauge
The India VIX — known in market parlance as the fear index — rose 1.3 percent to end at 23.4 on Monday, having surged as much as 3.8 percent during the session.
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