Indian equity benchmarks snapped a two-day winning run on Friday amid selling pressure in financial, oil & gas and consumer shares. The Bank Nifty tumbled 1.2 percent, its biggest fall in more than a week.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a long bear candle on the daily chart, completely engulfing the long bull candle of the previous session, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
“The last two sessions’ candles indicate the formation of a dark cloud cover type pattern. Technically, such patterns are formed at the highs and the area considered a reversal pattern on the downside,” he said. The recent bounce of the last few session seems to have completed, and the market turned down from the highs, Shetti added.
No meaningful upside up ahead
In a bearish signal, the Nifty failed to keep above the 17,400-17,500, said Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments. “Unless the index gets past the 17,400-17,500 patch on a closing basis, we won’t really see a meaningful upside rally,” he said.
Hathiramani believes there is every possibility for the market to reenter a bear trend if the index breaks the 17,100 mark.
Here are key things to know about the market before Monday’s session:
SGX Nifty
At 7:42 am on Monday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty50 index — were up 32.5 points or 0.2 percent at 17,267.5, suggesting a positive opening ahead on Dalal Street.
Global markets
Equities in other Asian markets began Monday on a negative note as investors remained cautious about the repercussions of the emergence of the Omicron variant of COVID-19. MSCI’s broadest index of Asia Pacific shares outside Japan was down 0.6 percent in early hours.
S&P 500 futures were up 0.5 percent in Asia. On Friday, Wall Street’s three main indices fell, with the technology stocks-heavy Nasdaq Composite tumbling 1.9 percent, as investors bet that strong US jobs data would not slow the Fed’s tapering of stimulus amid uncertainty around the Omicron.
What to expect on Dalal Street
According to Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, it continues to be a sell-on-rise market. “This view will remain intact as long as the Nifty does not surpass 17,900 which is the confluence point of two key trend lines., Sooner or later, we expect the recent low around 16,800 to be breached, but it will happen immediately or after some more consolidation in the range of 16,800-17,500 levels,” he said.
Traders are advised to continue with a stock-specific approach, said Chavan, who expects immediate hurdles at 17,350-17,500-17,600 levels.
HDFC Securities’ Shetti believes the near-term trend of the Nifty continues to be down, with the completion of the recent pullback rally. “There is the possibility of further weakness down to 16,800 levels this week, with immediate resistance at 17,300-17,350 levels,” he said.
Key levels to watch out for
Nifty50: According to Palak Kothari of Choice Broking, the index has support at 17,000 and faces resistance at 17,500.
Bank Nifty: For the banking index, support is expected at 35,300 and resistance at 37,000.
FII/DII activity
Foreign institutional investors (FIIs) net offloaded Indian equities worth Rs 3,356.2 crore on Friday. However, domestic institutional investors made net purchases of Rs 1,648.8 crore, according to provisional exchange data.
Call/put open interest
The maximum call open interest is placed at the strike price of 18,000 with 1.2 lakh contracts, and the next highest at 17,500 with 1.1 lakh contracts. The maximum put open interest is accumulated at 17,000 with 54,000 contracts, exchange data shows. This suggests an immediate hurdle at 17,500 followed by major resistance at 18,000, and support comes in at 17,000.
Long build-up
Here are five stocks that saw an increase in open interest as well as price, suggesting a build-up of long positions:
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| DEEPAKNTR | 6,000 | 2,326.50 | 3.86% | 380.00% |
| OBEROIRLTY | 2,100 | 866.15 | 2.30% | 200.00% |
| HINDPETRO | 18,900 | 301.85 | 1.55% | 133.33% |
| VEDL | 96,100 | 339.15 | 0.34% | 106.67% |
| GSPL | 79,900 | 314.5 | 2.91% | 104.35% |
Long unwinding
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| POWERGRID | 1,86,17,503 | 204.7 | -2.38% | -15.18% |
| IBULHSGFIN | 4,01,07,800 | 256 | -0.37% | -6.79% |
| L&TFH | 6,04,60,100 | 79.15 | -0.25% | -4.19% |
| INFY | 3,57,48,600 | 1,745.30 | -0.29% | -3.49% |
| PFC | 4,43,92,000 | 121.5 | -0.12% | -2.77% |
Short-covering
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| IDEA | 83,06,90,000 | 14.45 | 12.02% | -13.58% |
| IOC | 3,52,23,500 | 122.7 | 12.69% | -9.55% |
| COALINDIA | 5,00,55,600 | 160.4 | 1.57% | -3.75% |
| TATAMOTORS | 8,60,44,350 | 481.5 | 0.44% | -1.81% |
| JINDALSTEL | 3,67,97,500 | 359.9 | 0.16% | -1.02% |
Short build-up
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| PNB | 4,40,96,000 | 38.75 | -0.39% | 286.54% |
| IEX | 3,52,35,000 | 253.55 | -65.34% | 202.74% |
| ICICIBANK | 11,61,43,500 | 720.1 | -0.79% | 3.71% |
| ITC | 23,49,63,200 | 222.3 | -1.88% | 1.79% |
| BHARTIARTL | 6,64,43,780 | 720.6 | -1.89% | 2.76% |
(Increase in open interest and decrease in price)
52-week highs
Tech Mahindra, Bajaj Holding, Vodafone Idea, Power Grid and Torrent Power were among the nine stocks in the BSE 500 universe that hit 52-week highs.
52-week lows
Gillette was the only stock in the broadest index on the bourse to hit the trough.
Volatility index
NSE’s India VIX index — which gauges the expectation of volatility in the near term — eased two percent to settle at 18.5 on Friday.
First Published: IST
