Trade setup for January 5: Markets likely to open on a tepid note; 10 key things to know before opening bell

Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty50 index — were down 60.5 points or 0.3 percent at 17,814.5, suggesting a negative start ahead on Dalal Street on Wednesday.

Trade setup
Since it is the beginning of January series, no stock is under the F&O ban for Wednesday

Bulls paced on Dalal Street for the second consecutive trading session of 2022 on Tuesday. While S&P BSE Sensex zoomed 672 points or 1.14% to close at 59,855, broader NSE Nifty 50 index jumped 179 points or 1.02% to settle at 17,805. Benchmark indices are likely to open on a tepid note today as Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty50 index — were down 60.5 points or 0.3 percent at 17,814.5, suggesting a negative start ahead on Dalal Street. “The indices are in no mood to correct and the momentum still continues to be robust. The intraday declines are witnessing buying interest which is a sign of a healthy momentum. The broader markets too continued to witness buying interest while the banking space too continued to gain momentum,” said Ruchit Jain, Lead Research,

Key things to know before opening bell

Global markets

Asian markets declined on Wednesday amid concerns about the increasing Omicron cases across regions. China’s Shanghai Composite was down 0.6 percent and Hong Kong’s Hang Seng 0.9 percent. Japan’s Nikkei 225 was flat in early trade. MSCI’s broadest index was down 0.8 percent, while S&P 500 futures were down 0.2 percent in Asia. On Tuesday, all three main Wall Street indices closed on a mixed note. Dow Jones index rose 0.6 percent to settle at record closing high on Tuesday for a second straight day as financial and industrial shares rallied, The S&P 500 dipped 0.1 percent and the technology stocks-heavy Nasdaq Composite tumbled 1.3 percent.

Technical view

The sharp upside momentum continued in the market for the second consecutive sessions on Tuesday and Nifty closed the day with another promising gains of 179 points. After opening with positive note, the market showed quick intraday profit booking from the highs in the early part of the session. It later shifted into an excellent upside recovery from the lows and the upside momentum continued for the remaining part of the session. Intraday dips in between have been bought into. Another long bull candle was formed on the daily chart, which is back to back for the two sessions. This is a display of an emergence of strong upside momentum in the Nifty post upside breakout of the hurdle of down sloping trend line recently at 17250 levels. This is positive indication and signal more upside for the short term, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

The market has witnessed strength in the upside momentum recently, which was absent in the last couple of months. The crucial resistances have started to break on the upside one after another which signal an excellent shift in the momentum towards upside. The negative chart pattern of lower tops and bottoms of daily chart has been negated on Tuesday and this action signal that the upside bounce from the lows of 16410 levels is likely to be a new trended upmove rather than pull back rally of a down trend. Hence, any dips from here could open bullish sequence of higher tops and bottoms on the daily chart. The short term trend of Nifty is sharply up and this upside momentum is likely to continue for the short term. The next upside target to be watched at 18200 levels and this could be achieved in the next one week. Immediate support is placed at 17650 levels, he added.

Key support, resistance levels for Nifty

The Nifty50 index index was up consecutively for the second day in a row on Tuesday as heavy weight Reliance Industries supported the upside move with 2% gains. The benchmark index inched up by 1.02% to close at 17805.25. Technically, the index has managed to sustain above the prior swing high of 17639.50 levels, which indicates a bullish presence for the coming day. At present, the Index has support at 17,600 levels while resistance is at 18,000 levels.

Bank Nifty

Bank Nifty on Tuesday increased by 1.15% to settle at 36840.15 levels. It added 1.2 percent, after its biggest jump in more than seven months the previous day. It has support at 36300 levels while resistance is at 37500 levels.

Volatility gauge

NSE’s India VIX index, which gauges the expectation of volatility in the market, eased 2 percent to 16.1 on Tuesday.

FII and DII data

Foreign institutional investors (FIIs) net bought shares worth Rs 1,273.86 crore, while domestic institutional investors (DIIs) net purchased shares worth Rs 532.97 crore in the Indian equity market on Tuesday (January 4), according to the provisional data available on the NSE.

Call option data

According to data available with NSE website, maximum Call open interest was seen at 18000 strike 19.77 lakh contracts, followed by 17,500 strike, which holds 16.91 lakh contracts, and 18500 strike, which holds 11.08 lakh contracts. 18,000 will act as a crucial resistance level in the January series. Call writing was seen at 17700 strike, which added 1.25 lakh contracts, followed by 17800 strike (1.12 lakh contracts), and 18600 strike (77,900 contracts).

Put Option data

Maximum Put open interest was seen at 17000 strike with 34.27 lakh contracts, followed by 17500 strike, which holds 25.71 lakh contracts, and 17200 strike with 17.61 lakh contracts. Put writing was seen at 17700 strike, which added 4.37 lakh contracts, followed by 17100 strike, (2.39 lakh contracts), and 17800 strike (2.13 lakh contracts).

Analysts/Investors Meeting

Vishal Fabrics: Officials to interact with investors

Stove Kraft: Officials to interact with institutional investors and analysts

Satin Creditcare Network: Executives will interact with investors

Stocks under F&O ban on NSE

Since it is the beginning of January series, there is not a single stock under the F&O ban for Wednesday (January 5). Securities in the ban period under the F&O segment include companies in which the security has crossed 95 percent of the market-wide position limit.

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