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    Trade setup for July 7: The bulls may be preparing to take Nifty past 16,200 after crossing key resistance

    Trade setup for July 7: The bulls may be preparing to take Nifty past 16,200 after crossing key resistance

    Trade setup for July 7: The bulls may be preparing to take Nifty past 16,200 after crossing key resistance
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    By Sandeep Singh   IST (Updated)


    Trade setup for Thursday, July 7: The Nifty50 may be in for higher levels taking out a key hurdle, according to experts. Here's what the technical charts suggest:

    Indian equity benchmarks climbed to their highest closing levels in almost a month on Wednesday, backed by buying across most sectors as a slump in crude oil prices aided the sentiment on Dalal Street.
    What do the charts suggest for Dalal Street now?
    The Nifty50 has formed a long bull candle on the daily chart that almost engulfed its negative candle the previous day, suggesting a positive bias ahead on Dalal Street, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
    He sees the possibility of a strong breakout as the bulls took the 50-scrip index past the key 15,850-15,900 hurdle. "A sustainable move above 15,950 could mean a sharp upside ahead," he said. 
    More upside ahead?
    Kunal Shah, Senior Technical and Derivative Analyst at LKP Securities, sees the index continuing its upwards journey all the way towards 16,200.
    The index remains in a 'buy' mode as long as it holds support at 15,800, he said.
    Here are key things to know about the market ahead of the July 7 session:
    SGX Nifty
    Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — rose as much as 102.5 points or 0.6 percent to 16,085 ahead of the opening on Dalal Street on Thursday.
    Global markets
    Equities in other Asian markets were a mixed bag, as investors awaited minutes from the Fed’s last policy meeting to gauge the health of the world's largest economy and the pace of hikes in COVID-era interest rates to fight red-hot inflation. MSCI's broadest index of Asia Pacific shares outside Japan edged up 0.1 percent at the last count.
    Japan's Nikkei 225 was up 0.7 percent and South Korea's KOSPI 1.7 percent, but Hong Kong's Hang Seng was down 0.8 percent, and China's Shanghai Composite and Singapore's Straits Times down 0.1 percent each.
    S&P 500 futures slipped 0.1 percent. On Wednesday, caution persisted among investors on Wall Street amid fears of a slowdown. The S&P 500 fell 0.4 percent, the Dow Jones 0.5 percent and the Nasdaq Composite 0.3 percent.
    What to expect on Dalal Street
    HDFC Securities' Shetti believes the short-term trend of the Nifty50 has once again turned positive.
    Important levels to track
    The Nifty50 has trimmed the gap from its long-term simple moving average by more than 100 bps to almost seven percent.
    Shetti expects short-term resistance at around 16,200-16,300 and immediate support at 15,900.
    Period (No. of sessions)Simple moving average
    Nifty50Nifty Bank
    LKP Securities' Shah finds the Nifty Bank to be stronger than the 50-scrip benchmark.
    "The banking index continues to be in a 'buy' mode with strong support at 33,800. It is likely to test 35,000-35,500 levels, which coincide with its 200-day moving average," he said.
    FII/DII activity
    Call/put open interest
    The maximum call open interest is accumulated at the strike price of 16,200, with 1.7 lakh contracts, and the next highest at 16,300, with 1.4 lakh contracts, according to exchange data. The maximum put open interest is at 15,500 and 15,800, with 1.5 lakh contracts each.
    This suggests immediate resistance at 16,200 and immediate support at 15,800.
    Long build-up
    Here are five stocks that saw an increase in open interest as well as price:
    StockCurrent OICMPPrice change (%)OI change (%)
    Long unwinding
    StockCurrent OICMPPrice change (%)OI change (%)
    (Decrease in open interest as well as price)
    Short covering
    StockCurrent OICMPPrice change (%)OI change (%)
    (Increase in price and decrease in open interest)
    Short build-up
    StockCurrent OICMPPrice change (%)OI change (%)
    (Decrease in price and increase in open interest)
    52-week highs
    Four stocks in the BSE 500 universe — the broadest index on the bourse — touched the milestone: Varun Beverages, Blue Dart, Siemens and ABB.
    52-week lows
    A total of six stocks in the 500-scrip gauge hit 52-week lows: SpiceJet, Wockhardt, Hindustan Zinc, Indiabulls Real Estate, Indiabulls Housing Finance and IndiaMART InterMESH.
    Fear index
    The India VIX — which measures the expectation of fear in the market — cooled off 2.5 percent to settle at 20.3 on Wednesday.
    Market breadth remained skewed in favour of the bulls throughout the last session, as 1,223 stocks rose and 905 fell on Wednesday.
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