Trade setup for Thursday: Things to know before opening bell

After experiencing consecutive market declines, bearish sentiment is prevailing, with participants appearing to favor a "sell-on-rise" approach. If the market index fails to hold the immediate support at 18,900, it may trend lower toward last week's low at around 18,800. However, if there is an upward rebound, a significant hurdle awaits in the 19,100-19,300 range, according to experts.

The BSE Sensex closed 284 points lower at 63,591, and the Nifty50 was down by 90 points, forming a bearish candlestick pattern on the daily charts with lower tops and lower bottoms. The momentum indicator RSI also indicates a negative trend, ahead of the weekly F&O expiry.

According to Nagaraj Shetti, technical research analyst at HDFC Securities, this pattern suggests an emergence of selling pressure after a reasonable upside bounce and the formation of a lower top around 19,230 levels. Despite recent weakness with rangebound action over the last couple of sessions, selling momentum appears to have decreased. Shetti expects the Nifty to potentially fall back to the lower support level of 18,850 (the 200-day EMA) before experiencing another round of upward movement. Any intra-week upward movement from this point may face resistance around 19,100 levels.

After two previous sessions with an equal ratio of gainers and losers, market breadth now favors the bears, with three stocks declining for every two that are rising on the NSE. The broader markets remain rangebound, closing flat with a negative bias for the third consecutive session.

Key support and resistance levels for the Nifty, as per the pivot point calculator, are 18,973 (support), followed by 18,944 and 18,897. The immediate resistance levels are 19,066, followed by 19,095 and 19,142.

On November 1, the Nifty Bank formed a Doji candlestick pattern on the daily charts, indicating indecision among buyers and sellers about future trends. This follows the Bearish Belt Hold pattern in the previous session. The index found support at 42,700 on a closing basis and was down 145 points at 42,701.

According to Kunal Shah, senior technical & derivative analyst at LKP Securities, significant open interest on the call side is concentrated at 43,000, making it the immediate resistance level. A breach above this level could trigger short-covering moves toward 43,500. Conversely, if the lower-end support at 42,400 is breached on a closing basis, it may intensify selling pressure.

The pivot point calculator suggests that the Nifty Bank may find support at 42,616, followed by 42,563 and 42,476. On the upside, the initial resistance is at 42,788, followed by 42,841 and 42,927.

In the weekly options data, the 19,100 strike has the maximum call open interest (OI) with 1.4 crore contracts, making it a significant resistance level for the Nifty. It is followed by the 19,200 strike with 1.26 crore contracts, and the 19,300 strike with 1.11 crore contracts. Maximum call writing is visible at the 19,100 strike, which added 69.72 lakh contracts, followed by the 19,000 and 19,400 strikes, which added 49.79 lakh and 39.26 lakh contracts. The maximum call unwinding is at the 20,100 strike, which shed 2.52 lakh contracts, followed by the 20,200 and 19,600 strikes, which shed 1.93 lakh and 1.3 lakh contracts.

On the put side, the maximum open interest is at the 18,800 strike with 80.42 lakh contracts, serving as a key support level for the Nifty. It is followed by the 18,900 strike with 78.23 lakh contracts and the 18,500 strike with 69.61 lakh contracts. Significant put writing was observed at the 18,800 strike, adding 22.56 lakh contracts, followed by the 18,600 and 18,900 strikes, which added 21.74 lakh and 21.3 lakh contracts. Put unwinding was seen at the 19,100 strike, which shed 31.35 lakh contracts, followed by the 19,000 strike and the 19,200 strike, which shed 11.61 lakh and 8.05 lakh contracts.

Stocks with a high delivery percentage indicate investor interest. Among F&O stocks, Crompton Greave Consumer Electricals, Page Industries, Dabur India, Hindustan Unilever, and Astral saw the highest delivery percentages.

22 stocks have seen a long build-up, indicating a rise in open interest and price, which suggests a build-up of long positions. These stocks include Vodafone Idea, Bajaj Auto, Persistent Systems, Vedanta, and Sun TV Network.

42 stocks have experienced long unwinding based on the OI percentage, indicating a decrease in open interest and price, signaling long positions being unwound. Stocks in this category include Torrent Pharma, Maruti Suzuki India, Can Fin Homes, Ramco Cements, and Dalmia Bharat.

95 stocks have a short build-up, signifying an increase in open interest along with a decline in price, indicating a build-up of short positions. Some of the stocks in this category are Jindal Steel & Power, LIC Housing Finance, Indraprastha Gas, ABB India, and Max Financial Services.

Based on the OI percentage, 28 stocks are on the short-covering list. These stocks include HDFC Life Insurance Company, Tata Consumer Products, Dixon Technologies, Indian Hotels, and GNFC. A decrease in open interest along with a price increase is an indication of short-covering.

These data points provide valuable insights to help traders make informed decisions in today's market. Additionally, you should note that the stock market is influenced by various factors, and it's crucial to consult with certified experts before making any investment choices.

(Note: This summary is based on a financial news article and provides general information about the stock market. It is not financial advice and should not be considered as such. Please consult with a financial professional before making investment decisions.)