Trade Setup for Friday: Top 15 things to know before Opening Bell

Nagaraj Shetty of HDFC Securities said technically, Bearish Belt Hold pattern signals a sharp negative reversal in the market.

The market saw its biggest one-day fall in 2019 on June 6 as bears smashed the bulls right from the onset as the RBI did not make any announcement to tackle liquidity stress facing by NBFCs.

The market was also worried about banks' loan exposure to DHFL which defaulted on debt repayment on June 4.

After a 25 bps rate cut by the central bank and change in policy stance to accommodative from neutral, traders might have chosen to book profits as the market had seen a one-way rally after election results, experts said, adding 11,600 would be crucial level to watch out for in coming days.

"The fall can be contributed by that local market participant who was expecting 35bps cut and some aggressive measure of liquidity push which did not materialize," Sameer Kalra, Founder & President of Target Investing told Moneycontrol.

The BSE Sensex plummeted 553.82 points to close at 39,529.72 while the Nifty50 fell 177.90 points to 11,843.80 and formed 'Bearish Belt Hold' pattern on daily charts.

"Thus the battle is likely to get tougher going ahead. The bulls need to put in extra efforts to defend the support zone of 11,830-11,800, which holds the key for a further extension on the upside," Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas told Moneycontrol.

Nagaraj Shetty - Technical Research Analyst at HDFC Securities also said technically, this pattern signals a sharp negative reversal in the market. "The recent all-time high of 12,103 levels could now be considered as a near term top reversal pattern in the Nifty."

The short term trend of Nifty is down, one may expect further weakness in the next session, he said, adding next lower levels to be watched at 11,600 (upper area of previous opening upside gap of 20th May) in the next few sessions.

The weakness was seen in the broader market indices too as the Nifty Midcap index lost 1.65 percent and Smallcap index shed 1.86 percent. The fall was led primarily by the banking stocks especially the PSU banks. Nifty PSU Bank index plunged 5 percent.

We have collated 15 data points to help you spot profitable trades:

The key support and resistance level for Nifty

Nifty closed at 11,843.75 on June 6. According to the Pivot charts, the key support level is placed at 11,769.4, followed by 11,695. If the index starts moving upward, key resistance levels to watch out are 11,979 and 12,114.2.

Nifty Bank

The Nifty Bank index closed at 30,857.40, down 731.65 points on June 6. The important Pivot level, which will act as crucial support for the index, is placed at 30,591.64, followed by 30,325.87. On the upside, key resistance levels are placed at 31,332.34, followed by 31,807.27.

Call options data

Maximum Call open interest (OI) of 26.10 lakh contracts was seen at the 12,500 strike price. This will act as a crucial resistance level for the June series.

This is followed by 12,000 strike price, which now holds 18.98 lakh contracts in open interest, and 12,200, which has accumulated 13.09 lakh contracts in open interest.

Significant Call writing was seen at 12,500 strikes which added 6.6 lakh contracts, followed by 12,000 strikes that added 5 lakh contracts and 11,900 strikes which added 2.66 lakh contracts.

Call unwinding was seen at the strike price of 12,400, which shed 1.4 lakh contracts, followed by 11,500 strikes which shed 0.27 lakh contracts.

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