Indian equity benchmarks managed to end a volatile session well in the green on Tuesday thanks to a fag-end recovery, led by gains in financial, auto, metal energy stocks. Both headline indices closed 0.6-0.7 percent higher, having lost more than six percent in five straight sessions. The Nifty Bank ended 2.1 percent higher to break an eight-day losing streak.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a long bull candle on the daily chart with a long lower shadow, partially engulfing the long bear candle of the previous day, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
"This indicates a type of counterattack bulls pattern at the lows ... Hence, a further follow-through upmove could open a sizable bounce in the market ahead," he said.
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Brace for more volatility
The short term formation is still on the weak side, though the intraday texture suggests the continuation of a pullback in the next couple of sessions, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
"Volatility will remain as concerns related to geopolitical developments, rising oil prices and the Fed's likely move on key rates will continue to keep investors on the edge," he said. Back home, the monthly futures & options series is due for expiration on Thursday.
Traders can expect 17,400-17,450 levels if the index succeeds in holding the 17,000-17,100 support zone, he said.
Here are key things to know about the market before the January 27 session:
SGX Nifty
At 7:59 am on Thursday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty index -- were down 375 points or 2.2 percent at 16,889, suggesting a gap-down start ahead on Dalal Street.
Global markets
Equities in other Asian markets hit their lowest in more than 14 months and short-term US yields hit 23-month highs, after Fed Chairman Jerome Powell signaled plans to steadily tighten policy. MSCI's broadest index of Asia Pacific shares outside Japan was down 1.6 percent at the last count.
Japan's Nikkei 225 plunged more than 2.5 percent to a 52-week low, China's Shanghai Composite fell 0.9 percent and Hong Kong's Hang Seng 2.2 percent.
S&P 500 futures in Asia were down 1.5 percent. On Wednesday, the S&P 500 and the Dow Jones fell 0.2 percent and 0.4 percent respectively, though the tech stocks-heavy Nasdaq Composite finished flat.
What to expect on Dalal Street
HDFC Securities' Shetti believes the 50-scrip index is ready to show an upside bounce. "A confirmation of bottom reversal, going by Tuesday's low, is likely to pull the Nifty towards 17,800 in the near term. Any dips could find support around 17,100," he said.
Independent technical analyst Manish Shah believes the underlying sentiment in the index has turned marginally bullish, and one could see a rally to 17,550-17,600 over the next couple of days. On the lower side, he sees support at 17,690-17,600, which as long as held should lead to more upside.
"On a day to day basis, the Nifty will continue to be volatile and one can expect some knee-jerk reactions during the course of the day," he warned.
Key levels to watch out for
Nifty50: Immediate support for the 50-scrip index is expected at 17,000 and resistance at 17,500, according to Mohit Nigam, Head-PMS at Hem Securities.
Bank Nifty: For the banking index, he sees key support at 37,200 and resistance at 38,000.
FII/DII activity
Provisional exchange data shows foreign institutional investors (FIIs) net sold Indian equities worth Rs 7,094.5 crore on Tuesday. However, domestic institutional investors made net purchases of Rs 4,534.5 crore.
Call/put open interest
Exchange data shows that the maximum call open interest is accumulated at the strike price of 18,000, with 1.7 lakh contracts, and the next highest at 17,500, with 1.4 lakh contracts. On the other hand, the maximum put open interest is placed at 17,000, with 1.1 lakh contracts.
This suggests immediate resistance at 17,500 followed by a major hurdle at 18,000 and significant support 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 (%) |
| IDEA | 7,76,30,000 | 11.35 | 1.34% | 531.83% |
| IBULHSGFIN | 47,52,300 | 213.5 | 1.21% | 375.28% |
| BHEL | 1,68,63,000 | 57.95 | 0.87% | 330.07% |
| SUNPHARMA | 86,17,000 | 808.8 | 1.04% | 138.73% |
| ATUL | 27,600 | 9,556.80 | 3.29% | 135.33% |
Expiry: Feb 24
Long unwinding
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| PEL | 16,30,750 | 2,360.05 | -0.39% | -67.82% |
| ASIANPAINT | 20,53,650 | 3,151 | -0.26% | -65.89% |
| DABUR | 55,66,250 | 543.75 | -0.36% | -65.26% |
| JINDALSTEL | 1,75,47,500 | 375 | -0.50% | -64.61% |
| HAVELLS | 23,69,500 | 1,180 | -0.17% | -64.25% |
Expiry: Jan 27
(Decrease in open interest as well as price)
Short-covering
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| GRASIM | 28,21,500 | 1,721 | 1.68% | -73.22% |
| TORNTPOWER | 17,65,500 | 541.35 | 0.70% | -71.96% |
| NESTLEIND | 1,49,850 | 18,789.95 | 0.26% | -71.76% |
| VOLTAS | 19,66,000 | 1,184.55 | 0.71% | -71.11% |
| MUTHOOTFIN | 25,86,375 | 1,454.95 | 1.03% | -70.13% |
Expiry: Jan 27
(Increase in price and decrease in open interest)
Short build-up
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| PIDILITIND | 9,07,750 | 2,600 | -1.74% | 141.61% |
| ASHOKLEY | 95,22,000 | 131.8 | -0.94% | 118.10% |
| RAMCOCEM | 8,44,050 | 843.25 | -5.51% | 104.63% |
| ULTRACEMCO | 7,52,600 | 7,115.05 | -0.98% | 88.28% |
| TRENT | 9,69,325 | 1,078.55 | -4% | 87.73% |
Expiry: Feb 24
(Increase in open interest and decrease in price)
52-week highs
Five stocks in the BSE 500 pack hit 52-week highs: Maruti Suzuki, PowerGrid, ABB, Bharat Dynamics and Hitachi Energy.
52-week lows
As many as 22 stocks in the broadest index on the bourse hit 52-week lows, including SBI Cards, LIC Housing, HDFC Life, HDFC AMC, Petronet, MGL, Spandana Sphoorthy, IndiaMART, Strides Pharma Science, Wockhardt and V-Guard.
Volatility gauge
NSE's India VIX index—which gauges the expectation of volatility in the near term—settled 6.4 percent lower at 21.4 on Tuesday, having surged as much as 5.7 percent during the session.
(Edited by : Yashi Gupta)
First Published: Jan 26, 2022 4:55 PM IST
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