Indian equity benchmarks ended a volatile session lower on Friday, extending losses to a fourth straight day. Weakness across most sectors, with IT, financial and metal stocks being the worst hit, pulled the headline indices lower.
What do the charts suggest for Dalal Street now?
“Normally, such a doji formation after a reasonable move in either direction is considered an impending signal for a trend reversal. With the market having declined sharply in the last few sessions, one may expect an upside bounce in the short term,” said Shetti, who remains of the view that the Nifty’s short-term trend is weak with high volatility.
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Nifty sinks below key levels
“Although we were seeing 18,350 as a mild hurdle, we did not expect the Nifty to come off at such velocity. After the index breached 18,100, we did anticipate a further decline towards 17,800, but whatever happened in the last couple of sessions, with it even testing 17,500, has surprised us negatively to some extent,” Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, told CNBCTV18.com.
“We have been mentioning how 17,650 is important in the short term and the real damage of the recent upward trend would start below it. On Friday, we did slip below it but the way market recovered in the last one hour, so we need to revise our levels a bit,” he said.
Here are key things to know about the market before the January 24 session:
Global markets
Wall Street’s main indices tanked on Friday as Netflix earnings disappointed investors. The S&P 500 closed 1.9 percent lower, the Dow Jones fell 1.3 percent and the tech stocks-heavy Nasdaq Composite plummeted 2.7 percent. The S&P 500 and the Nasdaq logged their biggest weekly percentage drops since March 2020.
Earlier that day, European shares fell, with the Stoxx 600 index declining 1.8 percent lower.
What to expect on Dalal Street
Angel One’s Chavan sees crucial support for the Nifty50 in the 17,500-17,400 zone this week. “Although the global picture is not good, we still would like to back our inclination towards some relief moves. If any recovery has to happen, there would not be better levels than this,” he said.
He believes that the first sign of strength is likely to start above 17,800, after which, the index can reclaim the 18,000 terrain ahead of the Budget itself. “The first couple of sessions will be important for the market as they will set the tone ahead of the mega event (Budget)… One should focus on financial and auto spaces, which are likely to be the front-runners in case of a recovery,” he added.
Market participants will begin the trading week by reacting to quarterly numbers of index heavyweights Reliance Industries and ICICI Bank.
Ajit Mishra, VP-Research at Religare Broking, believes the Nifty should hold on to the 17,600 mark for any meaningful recovery, else it may slide to 17,350. He suggests taking hedged positions till the market stabilises.
Key levels to watch out for
Nifty50: Strong support for the 50-scrip index is expected at 17,200 and key resistance at 18,300, according to Mohit Nigam, Head-PMS at Hem Securities.
Bank Nifty: For the banking index, he sees key support at 37,100 and resistance at 38,500.
FII/DII activity
Provisional exchange data shows foreign institutional investors (FIIs) net sold Indian equities worth Rs 3,148.6 crore on Friday. However, domestic institutional investors made net purchases of Rs 269.4 crore.
Call/put open interest
Exchange data shows that the maximum call open interest is accumulated at the strike price of 18,000, with 1.8 lakh contracts, and the next highest at 18,500, with 1.3 lakh contracts. On the other hand, the maximum put open interest is placed at 17,000, with 1.1 lakh contracts.
This suggests a major hurdle at 18,000, and meaningful support only at 17,000.
Long build-up
Here are two 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 (%) |
| Biocon | 37,32,900 | 378 | 3.29% | 73.58% |
| Chola Finance | 25,22,500 | 653 | 0.43% | 163.10% |
Long unwinding
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| Infosys | 24340200 | 1783.2 | -2.27% | -4.75% |
| Tata Steel | 31916225 | 1168.35 | -3.54% | -18.57% |
| ICICI Bank | 56821875 | 807.05 | -0.74% | -10.30% |
| Bharti Airtel | 40975400 | 695.6 | -2.95% | -23.08% |
| ITC | 138937600 | 217.65 | -0.89% | -24.28% |
(Decrease in open interest as well as price)
Short-covering
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| Hindalco | 27602775 | 361.8 | 192.21% | -9.29% |
| HDFC Bank | 23825450 | 3,467.85 | 38.60% | -19.36% |
| HUL | 6883500 | 260.65 | 84.71% | -18.68% |
| HDFC | 11665800 | 573.6 | 70.12% | -8.55% |
| Maruti | 2227200 | 152.2 | 69.27% | -3.19% |
(Increase in price and decrease in open interest)
Short build-up
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| Voltas | 3019000 | 1187.65 | -5.08% | 0.37% |
| Dr Lal | 551125 | 3001.9 | -6.05% | 4.11% |
| Torrent Power | 2572500 | 551.8 | -3.97% | 1.24% |
| GMR Infra | 73485000 | 42.35 | -2.64% | 0.43% |
(Increase in open interest and decrease in price)
52-week highs
As many as 15 stocks in the BSE 500 pack hit 52-week highs, including Power Grid, Sun Pharma Advanced, Tata Elxsi, Adani Green, Adani Transmission, Greaves Cotton and Lakshmi Machine.
52-week lows
Ten stocks hit 52-week lows: SBI Cards, IGL, Cadila Healthcare, Zydus Wellness, IndiaMART, Sanofi, Spandana Sphoorty, Jubilant Pharmova, Strides Pharma and MAS Financial.
Volatility gauge
NSE’s India VIX index — which gauges the expectation of volatility in the market — climbed up 6.2 percent on Friday to 18.9, its biggest jump since January 5.
