Indian equity benchmarks snapped a two-day winning run on Tuesday, dragged by weakness in financial, consumer and metal shares. However, gains in oil & gas and automobile shares arrested the fall. The Bank Nifty failed to hold on to intraday gains for yet another day.
What do the charts suggest for Dalal Street now?
The Nifty50 index has formed a small negative candle on the daily chart with a lower shadow, hinting at the continuation of rangebound action below crucial resistance at 18,100, according to Subash Gangadharan, Senior Technical and Derivative Analyst at HDFC Securities.
The headline index could eventually break above the hurdle of 18,100 and move towards next resistance at 18,350 in the near term, he said.
Short-term texture still positive
The Nifty has once again found resistance near the 20-days simple moving average of 18,100, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities. However, the short-term texture of the index remains positive and could continue in the near future.
Here are key things to know about the market before Wednesday’s session:
Global Markets
European shares stayed near record highs on Tuesday, with strong corporate earnings aiding sentiment. All eyes were on US inflation data for clues on the direction of interest rates going forward. The pan-European STOXX 600 was up 0.1 percent at the last count, just below a record peak hit last week.
S&P 500 E-Mini futures were barely up, suggesting a flat start ahead on Wall Street a day after headline indices scaled record peaks.
What to expect on Dalal Street
The short-term trend of the Nifty appears to be positive, according to HDFC Securities’ Gangadharan. “A breakout of the current 18,060-18,100 range could open further upside towards next resistance at 18,250-18,350 levels in the next few sessions… Immediate support is placed at 17,850,” he said.
Rahul Sharma, Co-Founder of Equity99, expects volatility to continue in the coming sessions. On Thursday, auto, banking, metal, IT and consumer durables spaces will be in focus, he said.
Key levels to watch out for
Nifty50: Technically, 18,100 would be the sacrosanct breakout level for the bulls, above which, the index could move up to 18,150-18,190 levels, according to Kotak Securities’ Chouhan. He believes 17,940 could act as an important support for day traders, below which, the index could see another wave of correction up to 17,900-17,850.
“A break past the 18,080 level should lead to a window of opportunity for a rally to 18,150 as a weekly expiry play,” said independent technical analyst Manish Shah. “Over the course of the month, Nifty is in a vantage position to reclaim 18,600, with support pegged at 17,800. As long as Nifty hold above this level, 18,600 is achievable,” he added.
Bank Nifty: Crucial support for the banking index is seen at 39,275, followed by next major support at 39,150 and then 39,000, said Equity99’s Sharma. Strong resistance is expected at 39,560, followed by 39,750 and then 39,840, he said.
FII/DII activity
Foreign institutional investors (FIIs) remained bearish on Indian equities, net offloading shares worth Rs 860.7 crore on Monday. Net purchases by domestic institutional investors (DIIs), however, stood at Rs 1,911.8 crore, exchange data showed.
Call/put open interest
The maximum open interest is placed at the strike price of 18,200, and there is a high degree of accumulation at 18,100 and 18,500. The maximum put open interest is at the strike price of 17,900, and next at 17,500, NSE data shows.
This suggests immediate resistance can be expected at 18,100 and then 18,200 levels, followed by a major hurdle at 18,500, and support comes in at 17,900, followed by 17,500.
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 (%) |
| BSOFT | 11,55,700 | 439.1 | 4.86% | 70.08% |
| TVSMOTOR | 65,21,200 | 729 | 2.12% | 27.54% |
| M&M | 1,13,01,500 | 906.9 | 5.01% | 23.89% |
| RBLBANK | 2,64,50,900 | 219.4 | 6.92% | 21.02% |
| ATUL | 30,000 | 8,855 | 0.20% | 17.25% |
Long unwinding
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| PFIZER | 2,04,750 | 5,260 | -0.32% | -4.09% |
| MUTHOOTFIN | 38,05,125 | 1,635 | -2.02% | -2.69% |
| HINDPETRO | 1,69,07,400 | 344.4 | -0.66% | -2.43% |
| GODREJPROP | 19,33,750 | 2,440.35 | -0.76% | -1.63% |
| SUNPHARMA | 3,42,54,500 | 803.1 | -0.06% | -1.31% |
(Decrease in open interest and price)
Short-covering
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| DALBHARAT | 5,10,000 | 2,130 | 1.45% | -5.25% |
| SUNTV | 1,37,65,500 | 581.5 | 0.89% | -4.08% |
| ADANIENT | 2,57,92,000 | 1,640.95 | 4.43% | -3.41% |
| ABFRL | 1,14,29,600 | 307.9 | 6.12% | -3.37% |
| VOLTAS | 22,83,500 | 1,255.40 | 0.90% | -2.91% |
Short build-up
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| BRITANNIA | 10,56,400 | 3,619.55 | -3.05% | 31.37% |
| FSL | 22,04,800 | 199.95 | -1.50% | 25.35% |
| SBICARD | 10,74,000 | 1,089.95 | -1.66% | 25.14% |
| SRTRANSFIN | 31,93,600 | 1,622.90 | -2.38% | 13.65% |
| GSPL | 7,20,800 | 319.1 | -1.77% | 13.21% |
(Increase in open interest and decrease in price)
52-week highs
Forty-six stocks in the BSE 500 index — the broadest gauge on the bourse — hit 52-week highs, including Indian Oil, Larsen & Toubro, TVS Motor, Tata Motors DVR, Ashok Leyland, Bosh, Grasim, Indiabulls Real Estate and Mindtree. Shriram Transport Finance, Manappuram Finance, Raymond, Prestige, Sobha and VIP Industries also hit the milestone.
52-week lows
No stock in the index hit a 52-week low. Magellanic Cloud was among the 15 other stocks that hit the trough.
Volatility gauge
NSE’s India VIX index — which gauges the expectation of volatility in the near term — eased 2.1 percent to 16 on Tuesday, having slumped as much as 10.4 percent during the session.
