Indian equity benchmarks ended a choppy session one percent lower on Thursday, amid weakness across global markets after the
Fed signalled a rate hike in March. However, a rebound in banking counters -- in the second half of the day -- helped headline indices recover a majority of their intraday losses.
What do the charts suggest for Dalal Street now?
The
Nifty50 has formed a small body-positive candle on the daily chart with upper and lower shadows, reflecting high volatility in the market, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
"A follow-through upmove could open a sustainable upside for the short term," he said.
FAQs:
A pullback rally in the making?
The 50-scrip index's double bottom pattern suggests the strong possibility of a fresh pullback rally from the current levels, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities. It has been taking support near 16,900, with momentum indicators suggesting a quick uptrend, he said.
"For traders, strong support is placed at 17,000 and 16,900 levels, above which, a pullback rally could take the index to the 17,250-17,350 band. On the downside, any fall below 16,900 will make the uptrend vulnerable," he said.
Here are key things to know about the market before the January 28 session:
Global markets
European shares fell on Thursday following a global sell-off, as the two-year US bond yields hit a 23-month high. The US central bank reaffirmed plans to end its bond buys in March in what
Chairman Jerome Powell pledged will be a sustained battle to tame inflation. The pan-European Stoxx 600 index was down 0.3 percent in early hours.
S&P 500 futures were up 0.1 percent, suggesting mildly positive start ahead on Wall Street.
What to expect on Dalal Street
HDFC Securities' Shetti believes there is no confirmation yet of the formation of a bottom reversal at the lows. The sustenance of important support around 16,800-16,900 levels -- retested by the index on Thursday -- could be crucial for a reasonable bounce ahead, he said.
The Nifty saw buying interest at 16,900 for a second straight day, a sign the sentiment could be turning in favour of the bulls, said independent technical analyst Manish Shah. However, there is likely to be a lot of uncertainty in the sentiment ahead of the Union Budget, he said.
"As long as support at 16,800 holds, we should see more upsides in the Nifty... A break above 17,250 should lead to a rally to 17,650-17,700 levels," said Shah, who sees a high chance of the index breaking above 17,250.
Key levels to watch out for
Nifty50: Strong support for the index is expected at 16,600 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 37,200 and resistance at 38,500.
Provisional exchange data shows foreign institutional investors (FIIs) net sold Indian equities worth Rs 6,266.8 crore on Thursday. However, domestic institutional investors made net purchases of Rs 2,881.3 crore.
Exchange data shows that the maximum call open interest is accumulated at the strike price of 17,400, with 1.4 lakh contracts, and the next highest at 17,500, with 1.3 lakh contracts. On the other hand, the maximum put open interest is placed at 17,000, with 1.2 lakh contracts.
This suggests immediate resistance at 17,400 followed by a major hurdle 100 points higher, and major support at 17,000.
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 (%) |
| CIPLA | 44,10,900 | 928 | 2.45% | 60.73% |
| MFSL | 4,55,000 | 895.05 | 0.95% | 47.71% |
| AXISBANK | 1,12,32,000 | 773.95 | 3.20% | 30.34% |
| SBIN | 1,90,39,500 | 529.1 | 2.88% | 23.78% |
| M&M | 34,20,200 | 859.8 | 0.52% | 20.90% |
Long unwinding
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| BOSCHLTD | 31,200 | 16,230 | -0.45% | -86.22% |
| UBL | 1,99,150 | 1,516 | -2.76% | -58.17% |
| TORNTPOWER | 4,95,000 | 537 | -1.04% | -54.85% |
| NAM-INDIA | 7,39,200 | 323.4 | -3.10% | -48.27% |
| RAMCOCEM | 4,59,850 | 842.7 | -1.76% | -48.24% |
(Decrease in open interest as well as price)
Short-covering
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| RBLBANK | 1,15,59,400 | 153.35 | 6.12% | -69.82% |
| AUBANK | 8,02,000 | 1,276.90 | 2.09% | -34.29% |
| VEDL | 1,82,77,600 | 329.25 | 3.49% | -31.48% |
| BALRAMCHIN | 14,78,400 | 418.85 | 1.38% | -28.68% |
| INDHOTEL | 32,89,996 | 200.5 | 1.26% | -21.27% |
(Increase in price and decrease in open interest)
Short build-up
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| TECHM | 59,78,400 | 1,453 | -3.35% | 62.06% |
| MARICO | 27,63,000 | 464.4 | -0.66% | 52.23% |
| BHARATFORG | 17,58,000 | 718 | -1.47% | 51.45% |
| TORNTPHARM | 1,95,000 | 2,662.70 | -15.61% | 49.62% |
| LT | 39,61,175 | 1,913.35 | -0.64% | 41.89% |
(Increase in open interest and decrease in price)
52-week highs
Eight stocks in the BSE 500 pack hit 52-week highs, including
Maruti Suzuki, PowerGrid, Lakshmi Machine, Hitachi Energy and Bharat Dynamics.
52-week lows
HDFC AMC, L&T Finance, LIC Housing Finance, SpiceJet, Cadila Healthcare, Wockhard and Spandana Sphoorthy were among the 10 stocks in the broadest index on the bourse that hit 52-week lows.
Volatility gauge
NSE's India VIX index — which gauges the expectation of volatility in the near term — ended 1.4 percent lower at 21.1 on Thursday, cooling off after surging as much as 11.8 percent during the session.
(Edited by : Abhishek Jha)
