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Trade setup for May 30: Is Nifty50 strong enough to test 16,500 soon?

Trade setup for May 30: Is Nifty50 strong enough to test 16,500 soon?

Trade setup for May 30: Is Nifty50 strong enough to test 16,500 soon?
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By Sandeep Singh  May 30, 2022 7:49:23 AM IST (Updated)

Trade setup for Monday, May 30: The Nifty50 may climb to higher levels if it takes out 16,400 following the recent pullback, say experts. Here's what the technical charts suggest.

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Indian equity benchmarks rose to three-week closing highs on Friday, boosted by gains across most sectors, as the market entered the June futures & options series.
What do the charts suggest for Dalal Street now?
The Nifty50 is on the verge of taking out key resistance at 16,415 on the daily chart after after making a hammer pattern on Thursday, according to Subash Gangadharan, Senior Technical and Derivative Analyst at HDFC Securities.
The index has staged a crossover as its 20-period level has topped the 50-period mark, suggesting near-term strength, he pointed out.
All eyes on 16,400
The 50-strong benchmark showed tremendous resilience at lower levels despite an unfavourable global environment, even as it approached 15,900-15,700 levels over three back-to-back weeks, Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, told CNBCTV18.com. The market appears to have weathered the storm for the time being given its two-day recovery, he said
"We are back to the higher end of the recent range, at 16,400, and it would be interesting to see whether the index surpasses it. In our sense, it’s a matter of time and we would see the Nifty traverse this level to test 16,600-16800 this week," he said.
Here are key things to know about the market before the May 30 session:
SGX Nifty
Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — rose as much as 143 points or 0.9 percent to 16,480 early on Monday, suggesting a higher opening ahead on Dalal Street.
Global markets
Equities in other Asian markets rose and the dollar reached a near five-week low as investors wagered on an eventual slowdown in US monetary tightening following sharp rate hikes in the coming two months. MSCI's broadest index of Asia Pacific shares outside Japan was up 0.9 percent in early hours.
Japan's Nikkei 225 was up 1. 9 percent, Hong Kong's Hang Seng 1.2 percent, South Korea's KOSPI 1.1 percent and Singapore's Straits Times 0.1 percent. China's Shanghai Composite was flat.
S&P 500 futures were up 0.3 percent. On Friday, the three main Wall Street indices jumped as signs of peaking inflation and consumer resiliency supported growing optimism that the Fed will be able to tighten monetary policy without tipping the economy into recession. The S&P 500 rose 2.5 percent, the Dow Jones 1.8 percent and the tech stocks-heavy Nasdaq Composite 3.3 percent
What to expect on Dalal Street
Gangadharan expects the index to continue its momentum if it crosses its recent swing high of 16,415, which has been acting as strong resistance.
He recommends taking a stock-specific approach and buying stocks from sectors showing relative strength.
Important levels to track
The Nifty50 is more than 900 points below its long-term simple moving average.  

Period (No. of sessions)

Simple moving average
516,177.7
1016,130.6
2016,277.4
5016,918.1
10017,108.6
20017,261.4
Crucial support for the 50-scrip index is expected at 16,000 and some resistance at 16,500, according to Mohit Nigam, Head-PMS at Hem Securities.
FII/DII activity
Call/put open interest
The maximum call open interest is accumulated at the strike price of  17,000, with nearly one lakh contracts, and the next highest at 16,500, with almost 65,000 contracts, according to exchange data.
On the other hand, the maximum put open interest is at 16,000, with around 87,400 contracts, and the next at 16,300, with more than 77,000.
This suggests immediate resistance at 16,500 followed by the 17,000 hurdle, and immediate support at 16,300 and 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 change (%)OI change (%)
CHAMBLFERT28,08,000351.81.22%15.33%
ABB3,47,5002,290.554.23%11.44%
METROPOLIS5,32,0001,6623.86%8.50%
UBL9,09,3001,482.800.29%7.74%
RAMCOCEM24,32,700662.551.19%7.41%
Long unwinding
StockCurrent OICMPPrice change (%)OI change (%)
ALKEM2,12,6003,035.25-0.14%-4.70%
VEDL4,87,44,400307.85-1.97%-2.27%
NMDC4,51,41,250124.75-1.27%-1.80%
TATASTEEL3,54,08,875996.7-0.89%-0.74%
CUB1,06,55,600126.85-0.12%-0.67%
(Decrease in open interest as well as price)
Short covering
StockCurrent OICMPPrice change (%)OI change (%)
ATUL1,19,9258,162.052.49%-7.50%
CONCOR69,96,8006572.21%-7.12%
BALRAMCHIN65,12,0004027.01%-5.97%
APOLLOHOSP23,25,2503,855.955.16%-5.73%
LALPATHLAB11,34,2502,0897.45%-4.93%
(Increase in price and decrease in open interest)
Short build-up
StockCurrent OICMPPrice change (%)OI change (%)
CUMMINSIND11,86,2001,007.95-1.97%16.39%
IPCALAB6,84,000904-1.55%15.53%
PEL28,37,7251,648.70-11.68%11.88%
MUTHOOTFIN34,15,8751,096.55-3.76%10.41%
POLYCAB4,60,2002,404.10-0.26%8.41%
(Decrease in price and increase in open interest)
52-week highs
One stock on the BSE 500 — the broadest index on the bourse — managed to touch the milestone: Blue Dart Express.
52-week lows
On the other hand, six stocks hit 52-week lows: Muthoot Finance, Piramal Enterprises, Nesco, IPCA Labs, Hawkins Cookers and 3M India.
Fear gauge
The India VIX — known in market parlance as the fear gauge — fell 5.4 percent to settle at 21.5 on Friday.
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