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    Trade setup for Sept 21: Nifty50 may need to cross key hurdle decisively to sustain pullback

    Trade setup for Sept 21: Nifty50 may need to cross key hurdle decisively to sustain pullback

    Trade setup for Sept 21: Nifty50 may need to cross key hurdle decisively to sustain pullback
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    By Sandeep Singh   IST (Updated)

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    Trade setup for Wednesday, September 21: The Nifty50 has to cross 17,920 on a closing basis to target next resistance at 18,100, say experts. Here's what the technical charts suggest.

    Indian equity benchmarks extended gains to a second straight session on Tuesday, led by financial, healthcare, consumer durables and auto stocks. Globally, investors awaited the outcome of two-day FOMC deliberations due to end on Wednesday.
    The US central bank is widely expected to zero down on a 75 basis-point hike in the key lending rates.
    What do the charts suggest for Dalal Street?
    The Nifty50 has formed a small positive candle on the daily chart with a long upper shadow, reflecting the presence of strong overhead resistance around 17,900-18,000 levels, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
    Some weakness in the 50-scrip index cannot be ruled out, he said. "The opening upside gap remains unfilled... The charts also indicate a weak bounce in the last two sessions compared to recent weakness from the highs."
    "The Nifty Bank has turned volatile ahead of Fed policy announcements but remains in a buy mode as long as it holds support at 40,500. An immediate hurdle is at 42,000, which, once taken out on a closing basis, will open up room for 43,000-43,600 levels," said Kunal Shah, Senior Technical Analyst at LKP Securities.
    The banking index is likely to consolidate between 40,500 and 42,000 for a day before a trending move on either side, he added.
    Here are key things to know about the market ahead of the September 21 session:
    SGX Nifty
    On Wednesday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — fell as much as 94.5 points or 0.5 percent to 17,700.5 ahead of the opening bell on Dalal Street.
    Equities in other Asian markets fell tracking overnight losses on Wall Street, with MSCI's broadest index of Asia Pacific shares outside Japan down 0.8 percent at the last count. Japan's Nikkei 225 was down 1.4 percent, China's Shanghai Composite 0.5 percent and Hong Kong's Hang Seng 1.2 percent.
    S&P 500 futures eked out a gain of 0.1 percent. On Tuesday, the S&P 500 finished 1.1 percent lower, and the Dow Jones and the Nasdaq Composite fell one percent each.
    What to expect on Dalal Street?
    HDFC Securities' Shetti believes that a failure of the Nifty to cross 17,920 in the short term can lead to another round of weakness from the highs towards 17,450.
    However, a move beyond the hurdle could take it to next resistance around 18,100, he said.
    Key moving averages
    The Nifty50 has held ground about half a percent above its long-term simple moving average.
    Period (No. of sessions)SMA
    517,863.5
    1017,785.6
    2017,688
    5017,852.2
    10017,785.7
    20017,720.5
    FII/DII activity
    Foreign institutional investors (FIIs) remained net purchasers of Indian shares for a second straight day on Tuesday, following three straight days of selling.
    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 18,000, with 1.3 lakh contracts, and the next highest at 18,200, with 1.2 lakh, according to exchange data. On the other hand, the maximum put open interest is at 17,000, with 1.6 lakh contracts, and at 17,600, with 1.1 lakh.
    This suggests a tough hurdle at the 18,000 mark and immediate resistance at 17,600.
    Long build-up
    Here are five stocks that saw an increase in open interest as well as price:
    StockCurrent OICMPPrice changeOI change
    CIPLA7,267,6501,088.355.07%15.30%
    JKCEMENT380,2502,911.502.97%13.28%
    HONAUT13,87541,036.650.95%10.38%
    CUB7,095,0001852.41%10.22%
    RAIN10,874,500181.94.84%10.17%
    Long unwinding
    StockCurrent OICMPPrice changeOI change
    ESCORTS1,720,9502,076.40-0.66%-15.05%
    GRANULES10,494,000308.55-3.92%-4.94%
    PVR3,733,0041,764-0.99%-3.04%
    APOLLOTYRE14,000,000288.7-0.29%-2.83%
    INDIACEM13,728,600281.4-2.73%-2.68%
    (Increase in price and decrease in open interest)
    Short covering
    StockCurrent OICMPPrice changeOI change
    HEROMOTOCO2,669,1002,774.552.54%-6.09%
    IRCTC11,825,625706.82.80%-5.03%
    ABBOTINDIA59,24018,089.803.89%-3.98%
    TATAPOWER100,072,125234.90.97%-3.73%
    LTTS938,0003,408.152.12%-3.71%
    (Increase in price and decrease in open interest)
    Short build-up
    StockCurrent OICMPPrice changeOI change
    CANFINHOME3,092,700569-3.67%60.97%
    ABB1,171,5003,161.20-0.16%11.97%
    GUJGASLTD5,025,000492.45-0.19%9.20%
    GRASIM7,599,5251,740-0.76%5.76%
    VEDL26,939,000281-0.51%2.95%
    (Decrease in price and increase in open interest)
    52-week highs
    A total of 25 stocks in the BSE 500 universe — the broadest index on the bourse — hit 52-week highs, including four from the Sensex pack.
    ADANIENTCIPLAIIFLWAMMARUTISOLARINDS
    ADANIPORTSCOCHINSHIPINDIACEMMAZDOCKTRITURBINE
    AIAENGEICHERMOTINDUSINDBKMETROBRANDTVSMOTOR
    AMBUJACEMESCORTSITCMHRILVBL
    BHARTIARTLFLUOROCHEMMAHSCOOTERRATNAMANIWELCORP
    52-week lows
    On the other hand, three stocks hit the trough: Metropolis Healthcare, SIS and Mastek.
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