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Trade setup for Dec 5: Charts suggest the Nifty 50 may have made a near term top

Trade setup for Dec 5: Charts suggest the Nifty 50 may have made a near-term top

Trade setup for Dec 5: Charts suggest the Nifty 50 may have made a near-term top
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By Hormaz Fatakia  Dec 5, 2022 7:22:47 AM IST (Updated)

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Despite the drop on Friday, the Nifty 50 and the BSE Sensex managed to end with weekly gains of 1 percent each.

India's equity benchmark indices' eight-day record-breaking run came to an end on Friday. Despite Friday's decline, both Sensex and the Nifty 50 index ended the week with gains of 1 percent each.

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It was the week of the broader markets though with the Midcap index ending 3 percent higher. Among other outperformers were Metals, with the index ending 4 percent higher for the week and technology stocks that continue to bounce from their 52-week low. The IT index ended with gains of 2.4 percent in the week gone by.
On Friday's dealing room chatter, we also spoke about how Persistent Systems had gained for the ninth day in a row.
What do the charts suggest for Dalal Street?
According to Nagaraj Shetti, technical research analyst at HDFC Securities, the Nifty 50 has formed a small negative candle on its daily chart for two consecutive trading sessions. "This pattern indicates a resumption of minor profit booking in the market from the all time highs," he said.
In the global context, India is now in a situation where it is one of the few areas where there is no macroeconomic imbalance and there is growth coming through, according to Ashwini Agarwal of Demeter advisors. "I am assuming that macroeconomics for India will continue to remain stable and if they do, then valuations is something that investors will choose to ignore," he said during an interaction with CNBC-TV18 on its Editors Roundtable.
Here are key things to know about the market ahead of the December 5 session:
SGX Nifty
On Monday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — rose nearly 50 points points or 0.26 percent to 18,873 slightly positive opening ahead on Dalal Street.
Global Markets
Asian markets have opened mixed this morning while oil prices have risen as China relaxed some rules. The Nikkei 225 is down 0.1 percent, as is the Topix, which is down 0.2 percent.
The S&P ASX 200 in Australia is up 0.3 percent while the Kospi of South Korea is trading near the flat line. The MSCI's broadest index os Asia-Pacific shares ex-Japan is also trading 0.2 percent higher.
Oil prices are trading with gains of nearly 2 percent.
The US markets on Wall Street recovered from the lowest point of the session on Friday, looking past a hotter-than-expected labor data to the upcoming meeting of the US Federal Reserve.
The Dow Jones ended 0.1 percent higher after declining as much as 350 points during the session. Even the Nasdaq composite recovered from its day's drop of as much as 1.6 percent to end almost flat and close the week with gains of over 2 percent.
What to expect on Dalal Street
Shetti of HDFC Securities says that the Nifty 50's all-time high of 18,887, which the index scaled on Thursday can be considered a new higher top of the current higher top, higher bottom pattern. "The present weakness is expected to find a higher bottom in the short-term," he said.
The index's smaller and larger timeframe chart indicates that there is a possibility of an upside bounce from the lows in the next 1-2 trading sessions. Shetti sees immediate support for the Nifty 50 between levels of 18,550 and 18,450.
Key levels to watch out for
For the weekly options expiry of December 8, the 19,000 strike call added 31.14 lakh shares on Friday, while the 18,900 call added 22.68 lakh shares.
On the Put side, the 18,500 strike added 18 lakh shares in Open Interest while the 18,400 Put added another 18.27 lakh shares.
FII/DII activity
Manish Sonthalia of Motilal Oswal AMC believes that a weak Dollar is good news for Emerging Markets like India, which has been among the "shining stars" within the basket. He expects foreign investors, who were net sellers for most part of the year, to continue buying. "The buying is only going to accelerate going into the next year," told CNBC-TV18 during an interaction.
Long build-up
Here are five stocks that saw an increase in open interest as well as price:
StocksCurrent OICMPPrice ChangeOI Change
United Breweries11,83,6001,749.152.10%25.06%
Oracle Financial (OFSS)6,25,6003,240.952.90%12.52%
Vedanta3,65,05,600316.151.00%10.31%
L&T Finance Holdings6,06,74,27692.103.31%10.21%
JK Cement5,09,2503,2520.89%6.20%
Short build-up (Decrease in price and increase in open interest)
StocksCurrent OICMPPrice ChangeOI Change
Eicher Motors35,14,5253,339.00-3.39%14.69%
Sun TV1,00,57,500495.70-0.64%6.70%
Bajaj Finance56,03,6256,726.95-1.16%6.00%
Tata Consumer Products90,81,000802.40-2.09%5.64%
Maruti Suzuki India31,23,4008,884,95-1.64%5.51%
Short Covering (Increase in price and decrease in open interest)
StocksCurrent OICMPPrice ChangeOI Change
BHEL9,54,34,50091.657.63%-11.01%
L&T Technology Services8,27,8004,291.152.87%-10.18%
Polycab India10,53,9002,697.303.08%-6.97%
Atul1,12,7258,879.201.79%-6.82%
Astral13,56,0252,0364.91%-5.23%
Long Unwinding (Decrease In Price & Open Interest)
StocksCurrent OICMPPrice ChangeOI Change
HCL Tech1,04,46,1001,143.80-0.16%-7.75%
Sun Pharma1,58,19,3001,043.40-0.83%-6.78%
Bank of Baroda8,25,84,450172.35-0.20%-6.75%
Metropolis Healthcare8,10,3001,483.50-0.17%-6.31%
Abbot India41,36020,330-1.87%-5.40%
 
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