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    Trade setup for Sept 19: Nifty50 might sink to even lower levels soon

    Trade setup for Sept 19: Nifty50 might sink to even lower levels soon

    Trade setup for Sept 19: Nifty50 might sink to even lower levels soon
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    By Sandeep Singh   IST (Updated)

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    Trade setup for Monday, September 19: The Nifty50 needs to take out 17,820 on the upside decisively to resume its upmove, say experts. Here's what the technical charts suggest.

    Indian equity benchmarks suffered sharp losses on Friday, continuing to fall for the third day in a row, dragged by financial, IT, oil & gas and FMCG shares. Nervousness persisted globally amid fears of a slowdown, after data from the world's largest economy stoked fears the Fed has little reason to ease its cycle of rate hikes.
    What do the charts suggest for Dalal Street?
    The Nifty50 has formed a long bear candle on the daily chart, suggesting more pain for the bulls ahead, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
    One can expect the Nifty to sink below support in the 17,450-17,500 zone soon, he said.
    More pain on the cards?
    "Though the benchmark index's broader structure remains bullish, its close below 17,600 has dented the intermediate structure for sure. From a price perspective, it resembles a head and shoulder pattern on the daily timeframe, which does not augur well for the bulls," Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, told CNBCTV18.com.
    "If this pattern proves its significance, we may see a further correction towards 17,200-17,000 in the coming week, but as of now, we do not want to fall into this camp. We would rather reassess the situation in the first half of the week," he said.
    Here are key things to know about the market ahead of the September 19 session:
    SGX Nifty
    On Monday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — were last up 24 points at 17,587 ahead of the opening on Dalal Street, having gyrated within a 49-point range around the flatline earlier in the day.
    Equities in other Asian markets were largely in the red following two-month lows on Wall Street amid recession warnings from the IMF and the World Bank. Investors are bracing for a widely-expected 75 basis-point hike in key US interest rates by the Fed this week.
    MSCI's broadest index of Asia Pacific shares outside Japan was down 0.5 percent at the last count. Hong Kong's Hang Seng was down 0.8 percent and China's Shanghai Composite flat. The Japanese market was shut for a holiday.
    S&P 500 futures edged down 0.2 percent. On Friday, the S&P 500 fell 0.7 percent, the Dow Jones 0.5 percent and the Nasdaq Composite 0.9 percent. Earlier that day, European shares tumbled, with the Stoxx 600 index finishing 1.6 percent lower.
    What to expect on Dalal Street?
    HDFC Securities' Shetti is of the view the Nifty's short-term trend has changed to negative.
    "The formation of a bearish candlestick pattern on the daily and weekly charts indicates more weakness ahead for the market. Any upside from levels of around 17,200-17,150 in the next couple of weeks could find resistance around 17,700," he said.
    Key moving averages
    Friday's sell-off sent the Nifty50 sliding below all of its six main simple moving averages.
    Period (No. of sessions)SMA
    517,583.2
    1017,683.2
    2017,833.9
    5017,898.6
    10017,768.9
    20017,716.6
    Chavan of Angel One sees key support for the 50-scrip index at 17,400, a slide below which, he believes, may lead to further correction.
    The Nifty50 needs to cross 17,820 to "find its mojo back", he said. Any minor bounce towards 17,650-17,750 should be used to exit longs, he suggests.
    FII/DII activity
    Foreign institutional investors (FIIs) took to net selling of Indian shares for a third back-to-back day on Friday.
    Image
    In August, they made net purchases to the tune of Rs 22,025.8 crore — the first month of net inflows after 10 straight months of outflows, whereas domestic institutional investors (DIIs) net sold shares worth Rs 7,068.9 crore.
    Call/put open interest
    The maximum call open interest is accumulated at the strike price of 19,000, with 1.9 lakh contracts, and the next highest at 18,000, with 1.5 lakh contracts, according to exchange data. On the other hand, the maximum put open interest is at 17,000, with more than 92,000 contracts, and at 17,500, with about 81,000.
    This indicates the immediate hurdle at 18,000 and a firm base after immediate support at 17,500 only at the 17,000 mark.
    Long build-up
    Here's one stock that saw an increase in open interest as well as price:
    StockCurrent OICMPPrice change (%)OI change (%)
    INDIACEM13,888,100271.750.70%23.05%
    Long unwinding
    StockCurrent OICMPPrice change (%)OI change (%)
    VEDL33,042,900290.45-7.59%-18.28%
    ACC5,052,5002,637.10-4.32%-11.86%
    COROMANDEL1,495,9001,016.95-1.26%-10.76%
    ONGC49,299,250130.8-1.51%-9.52%
    RAMCOCEM3,421,250763.15-3.64%-8.87%
    (Increase in price and decrease in open interest)
    Short covering
    StockCurrent OICMPPrice change (%)OI change (%)
    INDUSINDBK21,114,9001,225.052.14%-6.22%
    BEL78,648,600111.650.50%-5.51%
    CIPLA7,549,7501,046.800.95%-4.85%
    MFSL2,129,4008251.11%-4.67%
    DELTACORP15,817,100224.41.04%-1.99%
    (Increase in price and decrease in open interest)
    Short build-up
    StockCurrent OICMPPrice change (%)OI change (%)
    CHOLAFIN6,137,500776.5-2.47%7.78%
    MUTHOOTFIN5,960,2501,029.10-2.85%7.65%
    ULTRACEMCO2,154,2006,513.50-4.45%5.55%
    HONAUT13,50040,554.45-3.59%5.33%
    CROMPTON3,957,000396.2-2.39%4.32%
    (Decrease in price and increase in open interest)
    52-week highs
    A total of 18 stocks in the broadest index on BSE — the BSE 500 — hit 52-week highs.
    ADANIENTCCLMAZDOCK
    ADANIPORTSCEATLTDMIDHANI
    ADANITRANSCOCHINSHIPPCBL
    AMBUJACEMINDHOTELSUMICHEM
    APOLLOTYREINDIACEMTHERMAX
    BDLINDUSINDBKWESTLIFE
    52-week lows 
    Nine stocks hit 52-week lows.
    APLLTDJUBLPHARMAMPHASIS
    BIOCONMEDPLUSSANOFI
    INTELLECTMETROPOLISVOLTAS
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