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    Trade setup for Aug 23: As Nifty50 sinks below 17,500, there might be more pain ahead for the bulls

    Trade setup for Aug 23: As Nifty50 sinks below 17,500, there might be more pain ahead for the bulls

    Trade setup for Aug 23: As Nifty50 sinks below 17,500, there might be more pain ahead for the bulls
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    By Sandeep Singh   IST (Updated)

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    Trade setup for Tuesday, Aug 23: The Nifty50 may weaken further amid high volatility in the short term, warn experts. Here's what the technical charts suggest.

    Indian equity benchmarks suffered their worst fall in more than two months on Monday amid weakness across global markets, as investors remained on the back foot amid fears of a global slowdown.
    The India VIX index — also known in market parlance as the fear index — jumped four percent, one of its biggest single-day gains so far this month.
    What do the charts suggest for Dalal Street?
    The Nifty50 has formed a long bear candle on the daily chart in a negative sign, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
    "This is a signal that the bears are in the driver's seat," he said.
    Brace for volatility 
    "The sentiment could remain volatile in the coming sessions as the focus would shift back to global concerns such as falling crude oil prices amid weakening demand and the US-China tussle over Taiwan," said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
    The expiry of monthly derivatives (futures and options) contracts is due on Thursday.
    "The sharp intraday sell-off and a bearish candle on the daily charts suggest the continuation of weakness in the near future. But a quick pullback rally is likely if the index trades above key resistance at 17,575, below which, the correction wave may continue till 17,400-17,350 levels," he said.
    Here are key things to know about the market ahead of the August 23 session:
    Global markets
    Equities in other Asian markets fell on Tuesday following a sell-off on Wall Street overnight, as nervousness persisted about a Fed gathering this week in Jackson Hole where policymakers are expected to reinforce a strong commitment to stamp out inflation.
    MSCI's broadest index of Asia Pacific shares outside Japan was down 0.7 percent at the last count. Japan's Nikkei 225 was down 1.2 percent, China's Shanghai Composite 0.4 percent and Hong Kong's Hang Seng 0.7 percent.
    S&P 500 futures eked out a gain of 0.1 percent. On Monday, the S&P 500 dropped 2.1 percent, the Dow Jones 1.9 percent and the tech stocks-heavy Nasdaq Composite 2.6 percent. 
    What  to expect on Dalal Street
    HDFC Securities' Shetti believes the 50-scrip index's short-term trend remains negative.
    He expects support around 17,330 and then 16,900 in the next few sessions and immediate resistance at 17,600.
    Key moving averages
    Monday's fall has widened the Nifty50's distance from its long-term moving average to six percent from about four percent.
    Period (No. of sessions)SMA
    Nifty50Nifty Bank
    517,533.4
    38,336.9
    1017,592.138,478.2
    2017,73938,924.4
    5017,778.939,093.6
    10017,608.7
    38,601.4
    20017,109.137,512.7
    Mohit Nigam, Head-PMS at Hem Securities, identified the following support and resistance levels:
    IndexSupport Resistance
    Nifty5017,30017,800
    Nifty Bank37,70038,800
    FII/DII activity
    Call/put open interest
    The maximum call open interest is accumulated at the strike price of 18,000, with 2.7 lakh contracts, and the next highest at 17,600 and 18,200, with 1.6 lakh each, according to exchange data.
    On the other hand, the maximum put open interest is at 17,000, with 1.2 lakh contracts, and at 17,500, with 1.1 lakh.
    This indicates immediate resistance at 17,600 and a major hurdle at 18,000, and significant support at 17,000.
    Long build-up
    Here are five stocks that saw an increase in open interest as well as price:
    StockCurrent OICMPPrice changeOI change
    PIIND1,550,2503,386.951.90%31.82%
    LALPATHLAB1,070,2502,410.601.24%6.96%
    COALINDIA29,034,600218.950.57%5.09%
    ALKEM352,6002,947.400.16%5.05%
    TATACONSUM7,470,000793.750.70%1.55%
    Long unwinding
    StockCurrent OICMPPrice changeOI change
    CUB5,055,000171.65-2.42%-17.80%
    JSWSTEEL25,307,100644.2-3.20%-17.08%
    FSL13,358,800104.9-4.77%-16.43%
    AUBANK6,019,000637.5-0.30%-16.22%
    AARTIIND2,661,350788.55-3.20%-16.00%
    (Increase in price and decrease in open interest)
    Short covering
    StockCurrent OICMPPrice changeOI change
    NAM-INDIA2,177,6003122.56%-20.72%
    GUJGASLTD5,116,2504821.36%-12.73%
    BEL19,695,400289.51.19%-9.11%
    BALRAMCHIN6,684,800344.31.74%-8.43%
    ICICIPRULI7,173,000575.20.42%-7.67%
    (Increase in price and decrease in open interest)
    Short build-up
    StockCurrent OICMPPrice changeOI change
    MINDTREE2,467,8003,373.25-4.08%18.88%
    TORNTPOWER2,862,000585-0.31%17.87%
    MOTHERSON32,152,500125.3-2.15%16.14%
    BHARATFORG6,976,000723.5-1.60%10.42%
    JKCEMENT358,7502,638.90-2.67%9.55%
    (Decrease in price and increase in open interest)
    52-week highs
    A total of eight stocks in the BSE 500 universe — the broadest index on the bourse — hit 52-week highs: ITC, Adani Power, Torrent Power, ELGI Equipments, Grindwell Norton, KSB, Phoenix Mills and Solar Industries.
    52-week lows
    On the flipside, four scrips hit 52-week lows: Biocon, Sanofi, Metropolis and Alembic Pharma.
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