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Trade setup for Friday: Key things to know before stock market's Opening Bell

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Trade setup for Friday: Following wild moves on either side on the weekly F&O expiry, Indian stock market ended flat on Thursday session. NSE Nifty finished 6 points lower at 17,38/2 whereas BSE Sensex lost 51 points and closed at 58,298 levels. Bank Nifty index went off 233 points and closed at 37,755 levels. Volumes on the NSE were in line with recent average. Among sectors, metals, IT and healthcare indices rose the most, while telecom and realty indices fell the most. Broad market indices performed a little better than the Nifty though advance decline ratio was much below 1:1.

After Bank of England’s biggest interest rate hike in last 27 years, here we list out key things that one should know before the stock market opening bell today:

Global markets cues

Following a mixed trade session among key indices, Wall Street participants digested a fresh slew of quarterly results ahead of NFP data scheduled on Friday. Dow Jones finished 0.26 per cent lower, Nasdaq went up 0.41 per cent, S&P 500 went off 0.08 per cent whereas Small Cap 2000 lost 0.27 per cent.

European shares rose on Thursday following strong results from a slew of companies, with focus squarely on Britain’s central bank that raised interest rates by the most since 1995. The Bank of England is raised the borrowing costs by 50 basis points to 1.75 per cent as it battles inflation running at a four-decade high. Asian stocks rose in a choppy session on Thursday as a bit of nervous tension over Nancy Pelosi’s visit to Taiwan dissipated and as investors took cues from robust US data and earnings.

Nifty technical outlook

“Nifty again showed hesitation in staying low as traders came in to do dip buying, although higher levels attracts some profit taking. 17491-17530 could be the resistance band for the Nifty in the near term while a breach of 17155 could result in acceleration of downtrend,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

“The correction was on the cards as the momentum setups on the hourly chart were overbought and had shown negative divergences. The recovery in the later half has resulted in the formation of a ‘Hanging Man’ candlestick pattern on the daily chart of Nifty. It is a candlestick pattern, which represents a potential reversal of the uptrend. Since this pattern hints at a trend reversal, the signal should be confirmed by a price drop today and hence, Friday’s price action post the RBI Policy will be of utmost importance as that will lead to the short term directional move for the market,” said Ruchit Jain, Lead Research at 5paisa.com.

Bank Nifty technical outlook

“Small range of Bank Nifty lies in between 37,600 to 38,500 whereas broader range for the banking index is placed between 37,500 to 38,600 levels. The immediate support for the index is placed at 37,600 levels whereas the index is placing immediate hurdle at 38,500 levels,” said Mehul Kothari, AVP — Technical Research at Anand Rathi.

Nifty Call Option data

As per data shown by nseindia.com at 3.30 pm on 04 August, Maximum total Call open interest was seen at 17400, 17500 and 17600 strikes with total open interest of 38956, 64351 and 46385 contracts respectively. Maximum Call open interest addition was seen at 17500 and 17600 strikes which added 40217 and 28917 contracts respectively. No major Call unwinding was seen at strikes ranging from 17000 to 17600.

Nifty Put Option data

As per data shown by nseindia.com at 3.30 pm on 04 August, Maximum total Put open interest was seen at 17300, 17200 and 17100 strikes with total open interest of 42032, 33250 and 26177 contracts respectively. Maximum Put open interest addition was seen at 17300, 17200 and 17000 strikes which added 23642, 17063 and 43447 contracts respectively. No major Put unwinding was seen at strikes ranging from 17000 to 17600.

Nifty Call Put ratio

PCR OI at 17300 strike is 1.4 and 17400 is nearly 0.5, which should be monitored for the session to determine the direction going ahead.

Bank Nifty call put data

“Bank Nifty as expected faced resistance at higher levels of 38200, but the crucial support zones of 37000 were held. Option chain reflects on the trading range in between 36500 to 38500, as PE writers active at 36500 strike with overall more than 45 thousand contracts and Call writers standing tall at 38500CE (70 thousand contracts),” said Shilpa Rout, Derivatives Lead Analyst at Prabhudas Lilladher.

FII DII data

Foreign institutional investors (FIIs) have net bought 1,474.77 crore worth of shares, whereas domestic institutional investors (DIIs) have net sold 46.79 crore worth of shares on August 4, as per provisional data available on the NSE.

NSE F&O ban on 5th August 2022

The National Stock Exchange (NSE) has added Escorts stock under its F&O ban list for trade date 5th August 2022. Securities in the ban period under the F&O segment include companies in which the security has crossed 95 per cent of the market-wide position limit.

US bond yield

US 10 year bond yield is up by 0.12 per cent to 2.679 whereas US 30 year bond yield is flat at 2.961.

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