Trade setup for Aug 22, 2022: Things to know before stock market’s Opening Bell

Trade setup for Aug 22, 2022: Things to know before stock market’s Opening Bell

Trade setup for Monday: After showing consistent upside moves on eight straight sessions, Indian stock market slipped into sharp downside reversal on Friday. NSE Nifty dipped 198 points and closed at 17,758 whereas BSE Sensex crashed 651 points and closed at 59,646 levels. Nifty Bank index finished 670 points lower at 38,985 mark. However, mid-cap index (-1.3 per cent) fell more than the Nifty. Volumes on the NSE were the highest since April 29, 2022, suggesting aggressive selling after a sustained rise. Advance decline ratio reflected the bearish sentiments in the market ending at 0.53:1.

Here we list out key factors that one should know before stock market’s opening bell today.

Global markets cues

On relief rally fade, Wall Street ended in negative zone on Friday. Dow Jones finished 0.86 per cent lower while Nasdaq crashed over 2 per cent. S&P 500 dipped 1.29 per cent whereas Small Cap 2000 nosedived 2.17 per cent. Asian stock markets were trading mixed on Friday, following the broadly positive cues from global markets overnight while European markets were modestly higher.

Asian markets’ early morning trends

In early morning deals in Monday, the Japanese Nikkei is down by 0.63 per cent, Hong Kong’s Hang Seng is up by 0.05 per cent, south Korean Kospi went off 0.86 per cent whereas Chinese Shanghai is quoting 0.26 per cent lower from its Friday close.

SGX Nifty technical outlook

In early morning session on Monday, SGX Nifty is down 85 points at 17,658 levels.

“Immediate support for SGX Nifty is placed at 17,480 whereas its strong support is placed at 17,250 levels. Similarly, the index is facing immediate hurdle at 17,820 while 18,000 is working as strong hurdle for the index. Intraday traders may assume short range of SGX Nifty today in between 17,480 to 17,820 whereas broader range of SGX Nifty today is placed between 17,250 to 18,000 mark,” said Anuj Gupta, Vice President — Research at IIFL Securities.

Anuj Gupta recommended ‘sell on rise’ strategy for today as market is trading in overbought zone.

Nifty technical outlook

“Nifty gained for the fifth week in a row (up 0.34 per cent) despite the losses on Friday. The high low bar of Friday has engulfed the previous three candles forming a bearish engulfing pattern. Hence till Nifty manages to cross the high of Friday (17,992), the trend will be bearish or sell on rises. On falls, the first support can come in at 17,725,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

Bank Nifty technical outlook

“Immediate support for Nifty Bank index is placed at 38,750 whereas strong support for the index is placed at 38,600 levels. Similarly, the banking index is facing immediate hurdle at 39,800 whereas strong hurdle for the index is placed at 39,800 levels,” said Rajesh Bhosale, Technical Analyst at Angel One.

Nifty Call Put Option data

“NIFTY FUT fails to cross the 18000 mark, following which the fall went in quite steep. Option chain for the monthly expiry suggests 17000PE holding overall maximum exposure if more than a lakh contracts, with 17300PE adding the highest fresh contracts of over 38 thousand. CE writers active at 18000CE now- with overall more than 2 lakh contracts and also being the most aggressive strike- adding fresh a lakh contracts,” said Shilpa Rout – Derivatives Lead Analyst at Prabhudas Lilladher.

Nifty Call Put ratio

“PCR OI at 17600 strike is well above 2, which if holds and increases, will give the base support to the BULLs,” said Shilpa Rout of Prabhudas Lilladher.

Nifty Bank Call Put Option data

“BANK NIFTY FUT Option chain reflects on PE writers being active at 38000PE with more than 88 thousand contracts overall, with immediate strikes witnessing PE OI unwinding. CE writers adding their positions at 39500/40000 strikes – overall a lakh contracts each, hinting on the broad trading range in between 38000-39800 zones,” said Shilpa Rout.

FII DII data

Foreign institutional investors (FIIs) have net bought 1,110.9 crore worth of shares, whereas domestic institutional investors (DIIs) have net sold 1,633.21 crore worth of shares on August 19, as per provisional data available on the NSE.

NSE F&O ban on 22nd August 2022

The National Stock Exchange (NSE) has added Balrampur Chini, Delta Corp and Tata Chemicals stock under its F&O ban list for trade date 22nd 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 0.17 per cent to 2.994 whereas US 30 year bond yield is down by 0.22 per cent to 3.232.

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