Indian equity benchmarks extended losses to a second straight session on Monday to hit fresh two-month closing lows. Concerns about rising interest rates and the impact of a tightening lockdown in Shanghai on global growth dampened the sentiment on Dalal Street.
The India VIX — known in market parlance as the fear gauge — rose 3.7 percent to the 22 mark, its highest since March 28.
What do the charts suggest for Dalal Street now?
“Monday’s weakness has negated the expectation of a positive impact after Friday’s doji pattern. The confirmation of a bullish bias could come only above 16,400-16,450 levels. However, weakness could aggravate on a slide below 16,140,” he said.
Traders, it’s time to sell the rise
The market continues its short-term corrective phase with no sign of a reversal yet, said Ruchit Jain, Lead Research at 5paisa.com.
He is of the view that with no broad market participation in intraday pullbacks, momentum readings on lower timeframes are in an oversold zone. He expects either some consolidation or a pullback to relieve the oversold setup.2
He advises caution and suggests traders take a ‘sell on rise’ approach.
Here are key things to know about the market before the May 10 session:
At 7:43 am, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — was down 106.5 points or 0.7 percent at 16,185, suggesting a lower start ahead on Dalal Street.
Global markets
Asian shares tumbled to their lowest in nearly two years as investors shed riskier assets on worries about higher interest rates and their impact on economic growth. MSCI’s broadest index of Asia-Pacific shares outside Japan was down one percent in early hours, falling for a seventh straight session and taking its losses to 17 percent so far in 2022.
Japan’s Nikkei 225 was down 0.9 percent, Hong Kong’s Hang Seng 2.6 percent and South Korea’s KOSPI 1.2 percent. China’s Shanghai Composite, however, was up 0.4 percent.
S&P 500 futures were up 0.5 percent. On Monday, Wall Street’s main indice fell sharply, with the S&P 500 dropping 3.2 percent to close below 4,000 for the first time since late March 2021. The Dow Jones declined two percent and the technology stocks-heavy Nasdaq Composite 4.3 percent.
What to expect on Dalal Street
HDFC Securities’ Shetti pointed out that there is no confirmation of a bottom reversal yet. “Unless the market clearly shows a sustainable upside in the next 1-2 sessions, the chances of a bounce are unlikely. Any bounce from current levels could be short-lived, creating a ‘sell on rise’ opportunity,” he said.
He reiterated the downside target of 15,700 for the near term.
Key levels to watch out for
The index is more than 900 points below its long-term simple moving average.
|
Period (No. of sessions) |
Moving average |
| 5 | 16,628.5 |
| 10 | 16,868.3 |
| 20 | 17,131.1 |
| 50 | 17,042.5 |
| 100 | 17,248.6 |
| 200 | 17,246.8 |
Palak Kothari of Choice Broking expects resistance and support at the following levels:
| Index | Support | Resistance |
| Nifty50 | 16,000 | 16,600 |
| Nifty Bank | 33,800 | 35,000 |
FII/DII activity
Foreign institutional investors (FII) net sold Indian shares worth Rs 3,361.8 crore on Monday, according to provisional exchange data. However, domestic institutional investors (DIIs) made net purchases worth Rs 3077.2 crore.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,000, with 1.7 lakh contracts, and the next higher at 16,500, with 1.2 lakh contracts, according to exchange data. On the other hand, the maximum put open interest is at 16,000, with 1.2 lakh contracts, and the next highest at 15,100, with more than 93,000 contracts.
This shows immediate support stays at the 16,000 mark and major resistance has moved 500 points lower to 17,000.
Long build-up
Here are five stocks that saw an increase in open interest as well as price:
| Stock | Current OI | CMP | Price change (%) | OI change (%) |
| POWERGRID | 4,23,81,351 | 245.85 | 3.02% | 22.56% |
| PVR | 23,07,690 | 1,705.20 | 0.21% | 11.53% |
| POLYCAB | 5,95,200 | 2,436.25 | 0.25% | 9.98% |
| ABB | 4,30,750 | 2,300.65 | 1.70% | 9.29% |
| INDUSTOWER | 1,21,40,800 | 206.5 | 3.41% | 5.83% |
Long unwinding
| Stock | Current OI | CMP | Price change (%) | OI change (%) |
| COROMANDEL | 14,27,500 | 905 | -1.04% | -6.61% |
| TATACHEM | 65,65,000 | 1,007.45 | -2.88% | -3.38% |
| ABBOTINDIA | 30,150 | 16,750 | -1.46% | -2.24% |
| MANAPPURAM | 2,69,67,000 | 109.1 | -0.64% | -1.13% |
| TATACONSUM | 68,10,750 | 757.7 | -1.26% | -1.08% |
(Decrease in open interest as well as price)
Short covering
| Stock | Current OI | CMP | Price change (%) | OI change (%) |
| FSL | 1,36,89,000 | 113.2 | 0.13% | -4.22% |
| FEDERALBNK | 6,74,30,000 | 93.85 | 2.74% | -4.14% |
| LTTS | 8,70,400 | 3,902.90 | 0.59% | -3.45% |
| OFSS | 3,16,500 | 3,582.05 | 1.47% | -1.26% |
| BAJFINANCE | 50,14,500 | 6,052.10 | 0.39% | -0.60% |
(Increase in price and decrease in open interest)
Short build-up
| Stock | Current OI | CMP | Price change (%) | OI change (%) |
| NAVINFLUOR | 2,90,475 | 3,708 | -0.16% | 24.55% |
| CANBK | 4,29,86,700 | 201.45 | -8.20% | 16.71% |
| SRF | 31,27,875 | 2,229.35 | -3.21% | 14.11% |
| UBL | 11,96,300 | 1,465.55 | -1.10% | 12.08% |
| LTI | 17,04,000 | 4,464.45 | -3.12% | 11.85% |
(Decrease in price and increase in open interest)
52-week lows
A total of 41 stocks on the BSE 500 — the broadest index on the bourse — hit 52-week lows:
| 3MINDIA | INDIGOPNTS | RAIN | ZOMATO |
| AARTIIND | INDOSTAR | RALLIS | ZYDUSLIFE |
| AMARAJABAT | INFIBEAM | RBA | |
| CANFINHOME | ITI | RBLBANK | |
| DBL | KALPATPOWR | ROSSARI | |
| FSL | KEC | SANOFI | |
| GLENMARK | MANAPPURAM | SEQUENT | |
| GRANULES | MFSL | STAR | |
| GULFOILLUB | NATCOPHARM | STLTECH | |
| HDFCAMC | NBCC | SUDARSCHEM | |
| HINDCOPPER | NESTLEIND | WELSPUNIND | |
| IBREALEST | PNBHOUSING | WIPRO | |
| IDFCFIRSTB | PRSMJOHNSN | WOCKPHARMA |
52-week highs
Two stocks on the index hit 52-week highs: PowerGrid and Coromandel International.
First Published: IST
