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Nifty50 May Slip Below 16,800 Soon As Market Enters October F&O Series


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Trade setup for Friday, September 30: One can expect more downside up ahead as the Nifty50 might give up key support at 16,800, say experts. Here’s what the technical charts suggest.

Indian equity benchmarks gave up initial gains in a volatile session on Thursday, as fag-end selling pressure in financial stocks sent the market tumbling into the red. The Nifty50 ended the September F&O series four percent lower — its worst performance in a monthly series since May.

All eyes are now the outcome of a three-day meeting of the RBI’s rate-setting panel that ends on Friday. Economists in a CNBC-TV18 poll expect the central bank to announce a 50-basis-point hike in the repo rate on September 30.

What do the charts suggest for Dalal Street?

The Nifty50 has formed a long bear candle at the edge of important support at 16,800 on the daily chart, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

“The market has been repeatedly testing support at 16,800 levels but not gaining momentum on the upside. This is not a good sign, and reflects that the support could be breached on the downside soon,” he said.

Banking pack remains weak

A breach of immediate resistance for the Nifty Bank at at 36,400 will lead to some short covering towards 39,000,” said Kunal Shah, Senior Technical Analyst at LKP Securities.

“A fall below lower-end support at 37,500 will aggravate the sell-off towards 37,000-36,000 levels,” he said. 

Here are key things to know about the market ahead of the September 30 session:

SGX Nifty

On Friday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — fell as much as 89 points or 0.5 percent to 16,723 ahead of the opening bell on Dalal Street.

Equities in other Asian markets began the day in the red, following overnight losses on Wall Street after a day’s breather amid concerns that the Fed’s steep rate hikes to fight inflation could hurt the US economy. MSCI’s broadest index of Asia Pacific shares outside Japan was down half a percent at the last count. 

Japan’s Nikkei 225 was down 1.7 percent, China’s Shanghai Composite 0.6 percent and Hong Kong’s Hang Seng 0.8 percent.

S&P 500 futures edged 0.1 percent lower. On Thursday, the S&P 500 fell 2.1 percent, the Dow Jones 1.5 percent and the tech stocks-heavy Nasdaq Composite 2.8 percent, as investors fretted about a rout in global currency and debt markets.

What to expect on Dalal Street?

HDFC Securities’ Shetti is of the view that a slide below 16,800 could take the 50-scrip benchmark all the way to its next key support at around 16,650.

“Any upside movement from here could encounter strong resistance around 17,030 levels,” he said.

Key moving averages

The Nifty50 remains about four percent below its long-term simple moving average in a bearish sign.

No. of sessions Nifty50 Nifty Bank
5 16,844.1 37,690.4
10 16,877.5 37,794
20 16,931.6 38,023.2
50 17,180.4 39,012.8
100 17,500.1 40,088.8
200 17,583.6 39,845.2

Foreign institutional investors (FIIs) remained net sellers of Indian shares for the seventh trading day in a row on Thursday, according to provisional exchange data.

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The maximum call open interest is accumulated at the strike price of 17,000, with 1.9 lakh contracts, and the next highest at 17,500, with 1.5 lakh contracts, according to exchange data. On the other hand, the maximum put open interest is placed at 16,800, with 1.6 lakh contracts, and at 16,500, with 93,000.

This suggests a tough hurdle at 17,000 and support after a strong base at 16,800 only at 16,500.

Here are five stocks that saw an increase in open interest as well as price:

Stock Current OI CMP Price change OI change
SBICARD 1,152,800 907.2 1.10% 65.51%
TORNTPHARM 200,500 1,560.55 4.35% 55.86%
PIIND 304,250 2,981.30 0.48% 55.22%
HINDUNILVR 3,162,300 2,704.50 0.14% 54.43%
APOLLOHOSP 315,125 4,378.95 2.67% 49.62%

Long unwinding

Stock Current OI CMP Price change OI change
HONAUT 3,375 38,913.70 -0.82% -62.67%
INTELLECT 462,000 514.85 -3.98% -59.74%
ASTRAL 244,200 2,168.70 -1.10% -46.06%
DEEPAKNTR 455,000 2,006.95 -3.17% -40.77%
BAJAJFINSV 1,869,000 1,627.05 -1.43% -37.48%

(Increase in price and decrease in open interest)

Stock Current OI CMP Price change OI change
FSL 4,919,200 102.3 0.20% -77.70%
EICHERMOT 763,350 3,622.50 0.31% -72.21%
RAMCOCEM 493,850 750 1.46% -65.40%
LTTS 217,400 3,528.45 0.70% -64.58%
ATUL 32,250 9,002.20 2.35% -57.91%

(Increase in price and decrease in open interest)

Stock Current OI CMP Price change OI change
MARUTI 595,100 8,608.50 -1.18% 64.01%
MOTHERSON 16,726,500 106.35 -0.33% 53.89%
GRASIM 1,072,550 1,662.75 -0.27% 52.26%
TITAN 1,224,750 2,529 -1.94% 39.87%
KOTAKBANK 5,651,600 1,777.10 -0.90% 37.14%

(Decrease in price and increase in open interest)

Four stocks in the BSE 500 universe — the broadest index on the bourse — touched the milestone: Cipla, Cochin Shipyard, Gujarat Fluorochemicals and RITES.

On the other hand, 13 stocks hit 52-week lows:

ALOKTEXT LICI
BSOFT MEDPLUS
DHANUKA SANOFI
IEX SHILPAMED
INDOCO SYMPHONY
INTELLECT ZENSARTECH
IOC



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