May 12 trade setup: Can Nifty50 hold 16,000 after 3% fall in 4 days?

Indian equity benchmarks failed to stay in the green for yet another day, extending losses to the fourth trading session in a row Though the Nifty50 recovered more than two-thirds of its intraday losses on Wednesday, it took its losses to 3.1 percent in four back-to-back sessions.

The 50-strong index briefly slipped below the 16,000 mark during the session — the first such instance in two months.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a small negative candle on the daily chart with a long lower shadow, suggesting a pullback rally in the short term but without the confirmation of a bottom reversal, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

He sees the possibility of a minor upmove to meet selling pressure at the highs.

All eyes on 16,000

Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, believes the market is in oversold territory with a sharp pullback rally possible in the near future, though larger texture is still on the bearish side.

He expects sacrosanct support for traders at 16,000, above which, he sees a pullback rally continuing up to 16,300-16,400 levels. “On the flipside, a dismissal of 16,000 could lead to further weakness up to the 15,940-15,900 zone,” he warned.

Here are key things to know about the market before the May 12 session:

Global markets

European markets rose in an extended rebound from two-month lows hit earlier this week, as investors awaited US consumer price data for cues on whether inflation was peaking. The pan-European Stoxx 600 index rose as much as 1.5 percent in early hours.

S&P 500 futures, however, were down 0.6 percent, suggesting weakness ahead on Wall Street.

What to expect on Dalal Street

HDFC Securities’ Shetti expects the Nifty to attempt to test the upper end of the 16,150-16,400 range in the coming sessions.

He pegs strong resistance around 16,250-16,300 levels that could mean another ‘sell on rise’ opportunity and immediate support at 16,000.

Period (No. of sessions)Moving average

FII/DII activity

Call/put open interest

The maximum call open interest is accumulated at the strike prices of 16,500 and 17,000, with 1.8 lakh contracts each, and the maximum put open interest at 15,500, with 1.3 lakh contracts, and 16,000, with 1.1 lakh, according to exchange data.

This shows strong resistance remains at 16,500 before a major hurdle at 17,000 and immediate support at 16,000.

Long build-up

Here are five stocks that saw an increase in open interest as well as price:

StockCurrent OICMPPrice change (%)OI change (%)

Long unwinding

StockCurrent OICMPPrice change (%)OI change (%)

(Decrease in open interest as well as price)

Short covering

StockCurrent OICMPPrice change (%)OI change (%)

(Increase in price and decrease in open interest)

Short build-up

StockCurrent OICMPPrice change (%)OI change (%)

(Decrease in price and increase in open interest)

52-week lows

A total of 85 stocks on the BSE 500 — the broadest index on the bourse — hit 52-week lows. Two Sensex stocks were part of that group: Nestle and Wipro.

52-week highs

No stock on the 500-scrip index managed to touch the milestone.

Fear gauge

The India VIX — known in market parlance as the fear index — rose 2.2 percent to settle at 22.8 on Wednesday, its highest in almost seven weeks.