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Trade setup for Aug 24: Nifty50 may extend pullback but volatility cannot be ruled out

Trade setup for Aug 24: Nifty50 may extend pullback but volatility cannot be ruled out

Trade setup for Aug 24: Nifty50 may extend pullback but volatility cannot be ruled out
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By Sandeep Singh  Aug 24, 2022 8:02:43 AM IST (Updated)

Trade setup for Wednesday, Aug 24: The Nifty50 may rally all the way to 18,000-18,100 levels if it holds the 17,670-17,690 zone but volatility may persist ahead of the monthly derivatives expiry, say experts. Here's what the technical charts suggest.

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Indian equity benchmarks recovered some of the sharp losses in the past two days in a volatile session on Tuesday, led by a rebound in financial, oil & gas and auto shares. Analysts expect volatility to persist ahead of the expiry of monthly futures and options contracts on Thursday.
Globally, investors awaited updates from an annual gathering of central bankers at the Jackson Hole symposium in the US this week for clues on the state of the world's largest economy and the future course of COVID-era interest rates.
What do the charts suggest for Dalal Street?
The Nifty50 has formed a bottom reversal pattern thanks to heavy buying at lower levels, and the higher highs and higher lows pattern appears to be intact, a signs that the trend remains positive, according to independent technical analyst Manish Shah.
"There is an opportunity for the bulls going into the last few days of August expiry. The index should see a rally back up to 18,000-18,100 levels if it manages to hold above the 17,670-17,690 band," he said.
Time to buy the dip in financial stocks
The Nifty Bank has made a strong bullish reversal candle, Kunal Shah, Senior Technical Analyst at LKP Securities, pointed out.
"As long as support in the 37,700-38,000 zone holds, the index remains in a 'buy on dip' mode. An immediate hurdle stands at 39,000, a move above which will see short covering," he said.
Here are key things to know about the market ahead of the August 24 session:
SGX Nifty
On Wednesday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — fell as much as 61 points or 0.3 percent to 17,676 ahead of the opening bell on Dalal Street.
Global markets
Equities in other Asian markets began the day weaker following a sluggish session on Wall Street overnight. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.4 percent at the last count.
Japan's Nikkei 225 was down 0.3 percent, China's Shanghai Composite 0.7 percent and Hong Kong's Hang Seng 0.8 percent.
S&P 500 futures were down 0.3 percent. On Tuesday, the S&P 500 fell 0.2 percent and the Dow Jones 0.5 percent, and the tech stocks-heavy Nasdaq Composite finished flat.
Key moving averages
The Nifty50 holds more than two percent above its long-term moving average.
Period (No. of sessions)SMA
Nifty50Nifty Bank
Mohit Nigam, Head-PMS at Hem Securities, identified the following support and resistance levels:
IndexSupport Resistance
Nifty Bank38,40039,300
FII/DII activity
Call/put open interest
The maximum call open interest is accumulated at the strike price of 18,000, with 2.5 lakh contracts, and the next highest at 17,800 and 17,900, with 1.5 lakh each, according to exchange data. On the other hand, the maximum put open interest is at 17,500, with 1.7 lakh contracts, and 17,000, with 1.6 lakh.
This indicates immediate resistance in the 17,800-17,900 zone and a strong base at 17,500.
Long build-up
Here are five stocks that saw an increase in open interest as well as price:
StockCurrent OICMPPrice changeOI change
Long unwinding
StockCurrent OICMPPrice changeOI change
(Increase in price and decrease in open interest)
Short covering
StockCurrent OICMPPrice changeOI change
(Increase in price and decrease in open interest)
Short build-up
StockCurrent OICMPPrice changeOI change
(Decrease in price and increase in open interest)
52-week highs
A total of seven stocks in the BSE 500 universe — the broadest index on the bourse — hit 52-week highs: Adani Transmission, Eicher, Bharat Electronics, Deepak Fertilisers, KSB, Grindwell Norton and Great Eastern Shipping.
52-week lows
On the flipside, three scrips hit 52-week lows: Sanofi, Metropolis and Alembic Pharma.
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