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Trade setup for Jan 7: Are bulls ready to make a comeback? Check out key market cues before Friday’s session – CNBCTV18

Indian equity benchmarks halted a four-day winning streak tracking weakness across global markets, after Fed minutes stoked fears of earlier-than-expected rate hikes. Financial, IT and oil & gas shares pulled the indices lower, though auto, consumer and PSU banking counters lent some support.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a small negative candle on the daily chart with upper and lower shadows, hinting at a minor trend reversal with high volatility, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. 

“This action in the underlying is considered a high wave type candle… Normally, high waves following a move indicate a trend reversal post-confirmation. There is hope for the bulls to make a comeback from the lows,” he said. 


All is not lost

The Nifty’s spinning top pattern is a sign of indecision in the market, said independent technical analyst Manish Shah. He, however, believes the index remains in a firm uptrend.

“In a fast uptrend, corrective decline coils last for 2-3 days. The Nifty may see sideways rangebound action between 17,650 and 18,003 but the probabilities favour a rally to 18,250-18,300 over the next 5-10 days,” he said. 

Here are key things to know about the market before the January 7 session:

SGX Nifty

At 7:47 am on Friday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — were up 22 points or 0.1 percent at 17,841.5, having risen as much as 58 points earlier in the day.

Global markets

Equities in other Asian markets rebounded on Friday from the previous day’s fall, which came after Fed minutes revealed a hawkish tone of officials, stoking once again fears of earlier-than-expected rate hikes. MSCI’s broadest index of Asia Pacific shares outside Japan was up 0.3 percent at the last count.

China’s Shanghai Composite was up 0.5 percent and Hong Kong’s Hang Seng 0.7 percent, but Japan’s Nikkei 225 was down 0.7 percent.

S&P 500 futures were up 0.2 percent. On Thursday, the three main Wall Street indices closed 0.1-0.5 percent lower.

What to expect on Dalal Street

The possibility of a sharp downtrend, as seen in the past, is ruled out in the short term, according to HDFC Securities’ Shetti, who sees important support at around 17,600-17,550 levels.

“We are not expecting any sharp decline and buying is expected to emerge from the lower levels after a minor dip… One may expect minor weakness or consolidation with high volatility in the next couple of sessions before a bounce from the lows,” he said.

As long as the Nifty remains below 18,600, levels of 17,600 and 16,800 will determine the course for the market, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities. “Below 16,800, the Nifty will be ready to reach 16,400 or 16,000 levels. However, a hold above 17,600 will help it move to 18,200-18,600 levels. The Nifty will remain volatile between 17,600 and 16,800,” he said. 

On Friday, Chouhan expects 17,750, 17,820 and 17,890 to act as major hurdles for the 50-scrip index. “On the dismissal of 17,950, the chances of the index returning to the 18,050/18,100 zone will be bright. Below 17,580, the Nifty will fall to 17,400-17,350 levels,” he added. 

Key levels to watch out for

Nifty50: The 50-scrip index has immediate support at 17,500 and resistance at 18,000, according to Mohit Nigam, Head-PMS at Hem Securities.

Bank Nifty: For the banking index, he sees support at 36,600 and resistance at 38,000.

FII/DII activity

Foreign institutional investors (FIIs) net sold Indian equities worth Rs 1,926.8 crore on Thursday. However, domestic institutional investors made net purchases of Rs 800.9 crore, according to provisional exchange data. December was a third straight month of FII outflows for Indian equities.

Call/put open interest

Exchange data shows the maximum call open interest is accumulated at the 18,000 strike, with 1.5 lakh contracts, and the next highest at 17,800, with some 97,500 contracts. On the other hand, the maximum put open interest is placed at 17,700, with one lakh contracts, and the next highest at 17,400, with almost 74,300 contracts.

This reflects immediate resistance at 17,800 followed by the major hurdle of Mount 18,000, and immediate support at 17,700, followed by a cushion at 17,400.

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:

SymbolCurrent OICMPPrice change (%)OI change (%)

Long unwinding

SymbolCurrent OICMPPrice change (%)OI change (%)

(Decrease in open interest as well as price)


SymbolCurrent OICMPPrice change (%)OI change (%)

(Increase in price and decrease in open interest)

Short build-up

SymbolCurrent OICMPPrice change (%)OI change (%)

(Increase in open interest and decrease in price)

52-week highs

In the BSE 500 pack, Page Industries, KPIT Tech, Sunteck, Radico Khaitan, Balrampur Chini, Thermax and KPR Mill were among the 11 stocks that hit 52-week highs.

52-week lows

No stock in the broadest index on the bourse hit a 52 -week low. Among the few other stocks that hit the trough were Paytm, PB Fintech, Dodla Dairy and Lumax Industries.

Volatility gauge

NSE’s India VIX index — which gauges the expectation of volatility — jumped 6.9 percent to 17.2, its biggest jump since December 20.