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

Trading setup for Monday: After consistent upward moves for eight consecutive sessions, the Indian stock market slipped into a sharp downward reversal on Friday. NSE Nifty dropped 198 points and closed at 17,758 while BSE Sensex crashed 651 points and closed at 59,646 levels. The Nifty Bank index ended 670 points lower at 38,985 marks. However, the midcap index (-1.3 percent) fell more than the Nifty. Volumes on the NSE were the highest since April 29, 2022, signaling aggressive sales after a sustained increase. Advance decline ratio reflected the bearish sentiments in the market which ended at 0.53:1.

Here we list the most important factors that one should know before the opening bell of the stock market today.

Global Market Directions

As the relief rally faded, Wall Street ended in negative zone on Friday. Dow Jones finished 0.86 percent lower, while Nasdaq crashed more than 2 percent. The S&P 500 fell 1.29 percent while the Small Cap 2000 plunged 2.17 percent. Asian equity markets traded mixed Friday, following generally positive signs from global markets overnight, while European markets were modestly higher.

The early morning trends of Asian markets

In early morning deals on Monday, Japan’s Nikkei fell 0.63 percent, Hong Kong’s Hang Seng 0.05 percent, South Korea’s Kospi fell 0.86 percent, while China’s Shanghai was 0.26 percent lower. then Friday closing.

SGX Helpful Technical Perspective

In the 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, while strong support is placed at 17,250 levels. Similarly, the index faces an immediate hurdle at 17,820 while 18,000 acts as a strong hurdle for the index. Intraday traders today can expect a short range of SGX Nifty between 17,480 and 17,820, while a broader range of SGX Nifty today is between 17,250 and 18,000,” said Anuj Gupta, Vice President of Research at IIFL Securities.

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

Helpful Technical Perspectives

Nifty won for the fifth week in a row (0.34 percent higher) despite Friday’s losses. Friday’s high low bar has engulfed the previous three candles, forming a bearish engulfed pattern. Until Nifty manages to reach Friday’s high (17,992), the trend will be bearish or sell on gains. On declines, the first support could come in at 17,725,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

Bank Nifty’s Technical Outlook

Immediate support for the Nifty Bank index is placed at 38,750 while strong support for the index is placed at 38,600 levels. Similarly, the banking index faces an immediate hurdle at 39,800 while a strong hurdle for the index is placed at 39,800 levels said Rajesh Bhosale, Technical Analyst at Angel One.

Useful Call Put Option Details

“NIFTY FUT fails to hit the 18000 mark, after which the decline became quite steep. Monthly expiration options chain suggests 17000PE has an overall maximum exposure as over a lakh contracts, with 17300PE adding the highest new business over 38k CE writers now active at 18000CE – with over 2 lakh contracts in total and also the most aggressive strike – adding new a lakh contracts,” said Shilpa Rout – Derivatives Lead Analyst at Prabhudas Lilladher.

Handy Call Put Ratio

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

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Nifty Bank Call Put Option Data

“BANK NIFTY FUT Option Chain Reflects On PE Writers Operating At 38000PE With Over 88 Thousand Contracts In Total, With Immediate Strikes Witnessing PE OI Expiration. CE Writers Add Their Positions At 39500/40000 strikes – generally one lakh contracts each, hinting at the wide trading range in between 38000-39800 zones,” said Shilpa Rout.

FII DII data

Foreign Institutional Investors (FIIs) Bought Net 1,110.9 crore in equities, while domestic institutional investors (DIIs) netted 1,633.21 crore in shares as of Aug. 19, according to preliminary data available on the NSE.

NSE F&O ban on August 22, 2022

The National Stock Exchange (NSE) has added Balrampur Chini, Delta Corp and Tata Chemicals stock to its list of F&O bans for trading date August 22, 2022. Securities in the ban period under the F&O segment include companies whose safety has exceeded 95 percent of the market-wide position limit.

US bond yield

The yield on US 10-year bonds rose 0.17 percent to 2,994, while the US 30-year bond yield fell 0.22 percent to 3.232.

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