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Trade setup for June 6: Can Nifty50 take out key resistance at 16,800 anytime soon? – CNBCTV18

Indian equity benchmarks finished a volatile session marginally in the red on Friday, as gains in oil & gas and IT shares were offset by losses in financial stocks.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a long negative candle on the daily chart though the pattern comes amid rangebound movement, ruling out any sharp negative impact, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

“Any rise from the 200-day exponential moving average could find selling pressure near 16,800, unless the hurdle is broken out decisively on the upside. On the weekly chart, the index has formed a small bull candle with an upper shadow, suggesting the presence of crucial resistance at the highs,” he said.

Key resistance at 16,700-16,800

The 50-scrip index has successfully taken out 16,400, but is yet to cross next key resistance at around 16,700-16,800 levels, Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, told

“We are still not completely out of the woods… This week, one needs to keep a close tab on global developments and with 16,400 being the level to watch out for from a price perspective. As long as it remains above this level, we can continue with a ‘buy on decline’ strategy. However, the higher side is till capped where 16,800 is an immediate hurdle, after which, 17,000 is a key psychological level,” he said.

Chavan suggests traders not to trade aggressively, and instead, be selective in stock-specific trades.

Here are key things to know about the market before the June 6 session:

Singapore Exchange Nifty futures — an early indicator of the Nifty index — fell as much as 123.5 points or 0.7 percent to 16,465.5 early on Monday, suggesting a lower start ahead on Dalal Street.

Global markets

Equities in other Asian markets made a sluggish start on Monday as caution persisted ahead of key US inflation data. MSCI’s broadest index of Asia Pacific shares outside Japan was down 0.1 percent at the last count.

China’s Shanghai Composite was down 0.1 percent, though Hong Kong’s Hang Seng was up 0.4 percent and Japan’s Nikkei up 0.3 percent.

S&P 500 futures were up 0.4 percent. On Friday, Wall Street’s three main indices fell following a solid US jobs reading that ate into hopes for a pause in the Fed’s aggressive policy tightening. The Dow Jones dropped 1.1 percent, the S&P 500 1.6 percent and the technology stocks-heavy Nasdaq Composite 2.5 percent.

What to expect on Dalal Street

HDFC Securities’ Shetti believes the Nifty50’s near-term uptrend status continues to be intact, with no sign of a reversal from the highs.

“More weakness could find strong support around 16,400-16,350 levels and the Nifty could show an upside bounce from the lower levels. A sustainable upmove could only resume above the hurdle of 16,800,” he said.

Important levels to track

Both the Nifty50 and the Nifty Bank are around four percent below their long-term simple moving averages, though they have crossed the 10- and 20-period levels.

Period (No. of sessions)Simple moving average
Nifty50Nifty Bank

Mohit Nigam, Head-PMS at Hem Securities, identified the following resistance and support levels:

Nifty Bank34,80035,600

FII/DII activity

Call/put open interest

The maximum call open interest is accumulated at the strike price of 17,500, with nearly 99,000 contracts, and the next highest at 17,000, with almost 94,000, according to exchange data. On the other hand, the maximum put open interest is at 16,300, with more than 76,000 contracts, and then 16,500, with nearly 72,000.

This suggests immediate resistance at the 17,000-mark and immediate resistance at 16,500.

Long build-up

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

StockCurrent OICMPPrice change (%)OI change (%)

Long unwinding

StockCurrent OICMPPrice change (%)OI change (%)

(Decrease in open interest as well as price)

Short covering

StockCurrent OICMPPrice change (%)OI change (%)

(Increase in price and decrease in open interest)

Short build-up

StockCurrent OICMPPrice change (%)OI change (%)

(Decrease in price and increase in open interest)

52-week highs

One stock on the BSE 500 — the broadest index on the bourse — touched the milestone: Ratnamani Metals & Tubes.

52-week lows

On the other hand, 10 scrips hit 52-week lows: Grasim, UltraTech, Shree Cement, Ramco Cements, JK Cement, Lux Industries, Equitas Small Finance Bank, Ipca Labs, Dalmia Bharat and Hikal.

Fear gauge

The India VIX — known in market parlance as the fear index — eased 1.7 percent to settle at 20 on Friday.

First Published:  IST