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Trade Setup: More steam left in Nifty50? Check key market cues before Wednesday’s session

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Nifty50 scaled a record closing high on Tuesday, taking out the 16,000 level. The index formed a long bull candle on the daily chart, signalling more upside in the near term. Here is how the August 5 session is poised to start.

Trade Setup: More steam left in Nifty50? Check key market cues before Wednesday’s session
Dalal Street is likely to start Wednesday's session on a positive note. At 8:08 am, Nifty futures trading on Singapore Exchange -- an early indicator of the NSE Nifty50 benchmark index in India -- were up 80 points or 0.49 percent at
16,245. On Tuesday, Sensex and Nifty soared to record highs led by IT and financial stocks amid optimism on economic recovery and earnings growth. Nifty Bank jumped 1.4 percent.
So, what do the charts suggest for Dalal Street?
Nifty50 has formed a long bull candle on the daily chart, indicating a sharp upside breakout of the two-month sideways range, which signals more upside in the near term, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities. "Any consolidation or minor dips from here could be a 'buy on dips' opportunity in the market," he said.
Nifty's big white candle with no lower shadow is a bullish sign suggesting more upside supported by two bullish candles in the last two sessions, said Rahul Sharma, Market and Head of R&D at Equity99.
Escaping boredom
Finally, the market has broken the boring trading range decisively. The best part of Tuesday’s spectacular session is the contribution from large-cap companies, said Shrikant Chouhan, executive vice president, equity technical research, Kotak Securities. "Any correction to 15,900-15,950 levels would be an opportunity to re-enter the market. Above 16,000, Nifty is heading for 16,270 with minor resistance at 16,200," he said.
Here are key things to know about the market before Wednesday's session:
Call/put open interest
The maximum call open interest is at the strike price of 16,200, and then 16,300. On the other hand, the maximum put open interest can be seen at 15,900, and then at 16,000, according to data from NSE. This indicates that immediate resistance can be expected at the 16,200 mark, followed by 16,300, and support comes in at the 15,900-16,000 levels.
Key levels to watch out for
Nifty50: "The upside breakout area of 15,960-15,900 is expected to offer strong support for the market... The next upside levels to be watched around 16,300-16,500 in the next 6-8 sessions, with important support at 15,960-16,000 levels," Shetty said.
Nifty Bank: Bank Nifty has major support at 35,000, followed by 34,850-34,600. On the upside, hurdles are placed at 35,350-35,400 levels, and then 35,600, according to Sharma.
Long build-up
Here are five stocks that saw an increase in open interest as well as price, suggesting a build-up of long positions:
SymbolCurrent OICMPPrice change (%)OI change (%)
STAR882,225788.73.29%230.89%
UBL1,946,0001,462.901.10%40.47%
CUMMINSIND2,754,600907.86.04%21.04%
DABUR14,722,5006162.35%15.91%
BRITANNIA1,894,0003,581.651.83%12.89%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
PVR1,578,7531,370.65-3.87%-4.67%
CHOLAFIN13,068,750519.2-1.75%-4.26%
BIOCON18,632,300390-0.23%-1.30%
AUBANK2,154,5001,197.30-1.88%-0.60%
PFC33,349,800132.3-1.42%-0.41%
(Decrease in open interest and price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
INDUSINDBK15,347,7001,023.503.91%-3.18%
MARUTI2,654,2007,165.051.45%-3.04%
ASTRAL244,7502,245.552.45%-2.81%
PAGEIND71,28032,840.701%-2.65%
ASIANPAINT4,340,4003,0361.59%-2.61%
(Increase in open interest and a decrease in price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
GODREJPROP1,901,2501,645.15-1.24%43.79%
VOLTAS3,692,0001,037-1.49%23.79%
RBLBANK29,559,700188.15-3.78%17.37%
SRTRANSFIN3,906,8001,346.60-2.27%16.07%
COLPAL2,223,9001,682.30-0.23%13.72%
(Decrease in open interest and an increase in price)
Volatility gauge
India VIX index -- a measure of volatility in the market -- soared 7.36 percent to 13.75, its biggest single-day spike in two weeks.
Global markets
Asian shares rose to one-week highs tracking overnight gains on Wall Street, although the mood remained cautious as the Delta variant of the coronavirus clouds the global economic outlook. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.1 percent to the highest since July 26. Wall Street’s main stock indices ended positive recovering from initial choppy movement, with notable gains from Apple, Eli Lilly and Robinhood Markets.
FII/DII flow
Foreign institutional investors bought Indian equities worth a net Rs 2,116.6 crore on Tuesday -- the first net purchase since July 13, exchange data showed. Domestic institutional investors, however, pulled out Rs 298.54 crore.
Earnings to watch
Adani Green, Adani Total, Apollo Tyres, Blue Star, Bosch, Cholamandalam Financial, SBI, Titan, Tata Communiations are among the companies scheduled to report their quarterly earnings on Wednesday.