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    Trade setup for July 27: Nifty50 could test support at 16,250 in next few days

    Trade setup for July 27: Nifty50 could test support at 16,250 in next few days

    Trade setup for July 27: Nifty50 could test support at 16,250 in next few days
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    By Sandeep Singh   IST (Updated)

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    Trade setup for Wednesday, July 27: Experts say more downside cannot be ruled out in the Nifty50 in the near term. Here's what the technical charts suggest:

    Indian equity benchmarks extended losses to a second straight session on Tuesday amid weakness in financial, IT and FMCG shares. Globally, nervousness persisted as the FOMC began a two-day policy meet, at the end of which the US central bank is widely expected to announce a hike in key interest rates.
    What do the charts suggest for Dalal Street now?
    The Nifty50 has formed a long negative on the daily chart, suggesting the onset of downside momentum, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
    There is no sign of a bottom reversal at the lows, he pointed out, and one can expect more weakness in the 50-scrip index in the short term.
    More downside on cards for Nifty Bank 
    The Nifty Bank has made an evening star pattern on the daily chart, suggesting a pause in the uptrend, said Kunal Shah, Senior Technical Analyst at LKP Securities.
    "In case of follow-up action after a bearish pattern, which is necessary, a further fall can be expected towards 36,000-35,700 levels. Immediate resistance stands at 36,600, which, if breached, will be followed by fresh short covering towards 37,000," he said.
    Here are key things to know about the market ahead of the July 27 session:
    SGX Nifty
    Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — fell as much as 29.5 points or 0.2 percent to 16,450 on Wednesday, suggesting a sluggish start ahead on Dalal Street.
    Global markets
    Equities in other Asian markets were largely in the red after a weak session on Wall Street overnight. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.9 percent at the last count.
    China's Shanghai Composite was down 0.2 percent and Hong Kong's Hang Seng down 1.5 percent, though Japan's Nikkei 225 edged up 0.1 percent.
    S&P 500 futures were up 0.7 percent. On Tuesday, the three main Wall Street indices fell as investors braced for a likely hike in the key interest rate by the Fed the next day.
    What to expect on Dalal Street
    HDFC Securities' Shetti believes the Nifty's short-term trend remains negative.
    He expects the index to hit next support around 16,250 in the next few sessions, and sees immediate resistance around 16,570.
    Important levels to track
    The Nifty50 is more than three percent below its long-term simple moving average.
    Period (No. of sessions)SMA
    Nifty50Nifty Bank
    516,592.1
    36,409.4
    1016,353.435,728.8
    2016,156.535,012.5
    5016,090.634,531.8
    10016,522.9
    35,131.9
    20017,039.636,411.4
    FII/DII activity
    Foreign institutional investors net sold Indian equities for a third straight day — returning to the broader trend in the past nine-odd months — following four days of buying, according to provisional exchange data.
    Call/put open interest
    The maximum call open interest is accumulated at the strike price of 17,000, with 2.2 lakh contracts, and the next highest at 16,700, with 1.5 lakh, according to exchange data.
    On the other hand, the maximum put open interest is at 16,000, with 1.3 lakh contracts, and 16,500, with more than one lakh.
    This suggests immediate resistance at 16,700 followed by a major hurdle at 17,000, and immediate support at 16,500.
    Long build-up
    Here are five stocks that saw an increase in open interest as well as price:
    StockCurrent OICMPPrice change (%)OI change (%)
    ASIANPAINT4,537,2003,1140.32%18.89%
    BAJAJFINSV669,25013,2805.16%16.37%
    BANKBARODA85,667,400115.950.74%10.01%
    COALINDIA24,028,200202.20.45%8.04%
    DLF27,576,450359.50.38%5.52%
    Long unwinding
    StockCurrent OICMPPrice change (%)OI change (%)
    AARTIIND2,765,050746.7-3.16%-35.38%
    L&TFH31,617,73272.55-0.07%-35.31%
    AUBANK4,434,000580.85-0.26%-35.12%
    RBLBANK30,795,00092.65-2.52%-30.90%
    NAM-INDIA2,316,800274-3.45%-27.62%
    (Decrease in open interest as well as price)
    Short covering
    StockCurrent OICMPPrice change (%)OI change (%)
    JSWSTEEL18,774,4505951.46%-35.28%
    IPCALAB626,600974.650.68%-23.03%
    HDFCAMC1,802,1001,863.500.22%-19.49%
    NAVINFLUOR459,0004,230.101.09%-16.72%
    SUNTV7,423,500465.455.06%-16.55%
    (Increase in price and decrease in open interest)
    Short build-up
    StockCurrent OICMPPrice change (%)OI change (%)
    BATAINDIA1,361,8001,810.15-1.75%36.57%
    CIPLA6,933,550956.5-0.40%30.69%
    HINDPETRO17,666,100229.4-1.01%28.37%
    MARUTI2,560,4008,526.60-1.04%23.39%
    HEROMOTOCO2,484,3002,770.50-1.24%22.87%
    (Decrease in price and increase in open interest)
     
    Fear index
    The India VIX — also known in market parlance as the fear index — took its gain to 9.1 percent in two days to settle at 18.2, its biggest rise in six weeks.
    52-week highs
    A total of eight stocks on the BSE 500 — the broadest index on the bourse —touched the milestone: ITC, Adani Enterprises, Timken, Vinati Organics, Schaeffler, Aster DM Healthcare, Gujarat Fluorochemicals and Coromandel.
    52-week lows
    Four stocks in the 500-scrip basket hit 52-week lows: Zomato, PB Fintech, Tanla and Sterlite Tech.
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