Trade Setup for Friday: Key Things to Know Before the Market’s Opening Bell

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Following the Bank of England’s biggest interest rate hike in 27 years, here we list the key things to know ahead of the stock market opening today:

Global market signals

After a mixed trading session among the major indexes, Wall Street participants digested another round of quarterly results ahead of Friday’s NFP data. The Dow Jones ended down 0.26%, the Nasdaq rose 0.41%, the S&P 500 lost 0.08% while the Small Cap 2000 lost 0.27%.

European stocks rose on Thursday after strong results from a slew of companies, with a focus on Britain’s central bank raising interest rates the most since 1995. The Bank of England raised interest rates borrowing costs by 50 basis points to 1.75% as it battles inflation at its highest level in four decades. Asian stocks rose in a choppy session on Thursday as nervous tension over Nancy Pelosi’s visit to Taiwan eased and investors took inspiration from strong U.S. data and earnings.

Early morning Asian markets today

In early morning trading on Friday, Japan’s Nikkei is up 0.34%, Hong Kong’s Hang Seng jumped 2.06% while China’s Shanghai was down 0.04%. The South Korean kospi is up 0.67%.

SGX Nifty Technical Outlook

Asked about the SGX Nifty Morning Indices today, Anuj Gupta, VP – Research at IIFL Securities, said: “The overall trend for SGX Nifty is positive and it is appropriate to maintain the strategy of buying on the dips during Immediate support for SGX Nifty is placed at 17,270 while the strong support zone for the index is around 17,100 levels.Similarly, SGX Nifty faces an immediate hurdle at 17,520 while the strong hurdle for the index is placed at 17,680.

Clever technical insights

“Nifty again showed reluctance to stay low as traders came to buy lower, although higher levels are attracting some profit taking. 17491-17530 could be the resistance band for Nifty in the short term while that a break of 17155 could cause the downtrend to accelerate,” said Deepak Jasani, head of retail research at HDFC Securities.

“The correction was on the charts as momentum setups on the hourly chart were overbought and had shown negative divergences. The rally during the second half resulted in a ‘Hanging Man’ candlestick pattern forming on the chart daily Nifty. It is a candlestick pattern, which represents a potential reversal of the uptrend. Since this pattern hints at a reversal in the trend, the signal should be confirmed by a decline in price today and therefore , Friday’s price action after the RBI policy will be of utmost importance as it will lead to a short-term directional move for the market,” said Ruchit Jain, Head of Research at 5paisa.com.

Bank Nifty Technical Outlook

“The small range for Bank Nifty is between 37,600 and 38,500, while the larger range for the Bank Index is between 37,500 and 38,600 levels. Immediate support for the index is placed at 37,600 levels while the index places an immediate hurdle at 38,500 levels.” said Mehul Kothari, AVP – Technical Research at Anand Rathi.

Smart call data

According to data presented by nseindia.com at 3:30 p.m. on August 04, the maximum total open interest on calls was observed at 17,400, 17,500 and 17,600 strikes with total open interest of 38,956, 64,351 and 46,385 contracts respectively. The addition of maximum call open interest was seen at 17,500 and 17,600 strikes, which added 40,217 and 28,917 contracts respectively. No major call outs were seen in strikes ranging from 17000 to 17600.

Smart Put Data

According to data presented by nseindia.com at 3:30 p.m. on August 04, the maximum total open interest to sell was observed at 17,300, 17,200 and 17,100 strikes with total open interest of 42,032, 33,250 and 26 177 contracts respectively. The addition of maximum sell open interest was seen at 17300, 17200 and 17000 strikes, which added 23642, 17063 and 43447 contracts respectively. No major unwinding of the put was seen in strikes ranging from 17,000 to 17,600.

Nifty Call Put ratio

The PCR OI at 17300 strike is 1.4 and 17400 is close to 0.5, which should be watched during the session to determine which direction to go.

Bank Nifty call put data

“As expected, Bank Nifty faced resistance at higher levels of 38200, but crucial support areas at 37000 were held. The options chain reflects the trading range between 36500 and 38500, as active PE writers at 36,500 hit with over 45,000 contracts and standing call writers at 38,500 CE (70,000 contracts),” said Shilpa Rout, chief derivatives analyst at Prabhudas Lilladher.

FII DII Data

Foreign Institutional Investors (IFIs) bought 1,474.77 crore of shares, as domestic institutional investors (DIIs) sold off 46.79 crores in shares on August 4, according to preliminary data available on the NSE.

Banned by F&O NSE on August 5, 2022

The National Stock Exchange (NSE) has added escort stocks to its F&O blackout list for the trade date of August 5, 2022. Blackout stocks in the F&O segment include companies in which security has exceeded 95% of the market-wide position limit. .

U.S. bond yield

The US 10-year bond yield was up 0.12% at 2.679, while the US 30-year bond yield was flat at 2.961.

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