Indian equity benchmarks finished a volatile session more than one percent lower on Friday, with the Nifty50 putting an end to a winning spree that lasted eight days in a row.
The 50-scrip gauge returned all the way to 17,758.5, having come within eight points of the psychologically important 18,000 mark.
What do the charts suggest for Dalal Street?
The Nifty50 has formed a long bear candle on the daily chart engulfing the previous two small bull candles, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
"A negative reversal type candle pattern has been formed on the weekly chart, resulting in the failure of an upside breakout of the significant downtrend line. This is not a good sign for the bulls and one may expect further weakness in the short term," he said.
Consolidation on the cards
The index has entered a short-term consolidation phase, according to Gaurav Ratnaparkhi, Head Technical Research at Sharekhan by BNP Paribhas,
"In the week gone by, the index crossed a crucial falling trendline drawn from the October 2021 high and moved back towards the trendline in order to retest it. Going ahead, it is likely to witness consolidation near the 17,700-18,000 band," he added.
Here are key things to know about the market ahead of the August 22 session:
SGX Nifty
On Monday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — signalled a gap-down start ahead on Dalal Street, falling as much as 109.5 points or 0.6 percent to 17,634.5 ahead of the opening bell.
Global markets
Equities in other Asian markets began the week in the red, following a broad sell-off on Wall Street on Friday, as investors remained concerned about the strength of the global economy amid looming steep hikes in COVID-era interest rates. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.6 percent at the last count.
Japan's Nikkei 225 was down 0.5 percent. S&P 500 futures were down 0.4 percent, suggesting a weak start ahead in the US dragged by mega-cap stocks.
What to expect on Dalal Street
HDFC Securities' Shetti is of the view the short-term chart signals more weakness ahead in the market.
"One may expect the Nifty to slide down to 17,300 in the next 1-2 weeks. Immediate resistance is placed around 17,850," he said.
Key moving averages
In a bullish sign, the Nifty50 is about four percent above its long-term simple moving average.
| Period (No. of sessions) | SMA | |
| Nifty50 | Nifty Bank | |
| 5 | 17,767.4 | 39,002.9 |
| 10 | 17,851.8 | 39,262.2 |
| 20 | 17,880.9 | 39,346.3 |
| 50 | 17,791.8 | 39,147.6 |
| 100 | 17,588.1 | 38,560.7 |
| 200 | 17,045.5 | 37,368.1 |
Mohit Nigam, Head-PMS at Hem Securities, identified the following support and resistance levels:
| Index | Support | Resistance |
| Nifty50 | 17,600 | 18,000 |
| Nifty Bank | 38,350 | 39,500 |
FII/DII activity
Foreign institutional investors (FIIs) returned to net buying of Indian shares after a day's pause.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 18,000, with 2.3 lakh contracts, and the next highest at 17,900, with 1.8 lakh, according to exchange data. On the other hand, the maximum put open interest is at 17,000, with 1.1 lakh contracts, and at 17,500, with almost one lakh.
This suggests a major hurdle at the 18,000 mark and an immediate base at 17,500.
Long build-up
One stock saw an increase in open interest as well as price:
| Stock | Current OI | CMP | Price change (%) | OI change (%) |
| LT | 8,519,100 | 1,936.50 | 2.19% | 1.66% |
Long unwinding
| Stock | Current OI | CMP | Price change (%) | OI change (%) |
| AMARAJABAT | 5,518,000 | 513.1 | -2.15% | -26.84% |
| AUROPHARMA | 11,950,000 | 566.6 | -2.89% | -24.04% |
| JSWSTEEL | 32,713,200 | 664.95 | -1.60% | -22.64% |
| PEL | 4,007,025 | 1,925 | -2% | -22.38% |
| GRASIM | 9,915,150 | 1,598.50 | -0.98% | -20.47% |
(Increase in price and decrease in open interest)
Short covering
| Stock | Current OI | CMP | Price change (%) | OI change (%) |
| ALKEM | 412,200 | 2,946.10 | 0.31% | -14.46% |
| AMBUJACEM | 55,236,600 | 417.95 | 1.74% | -11.78% |
| IRCTC | 12,369,000 | 730 | 1.89% | -11.61% |
| TATACHEM | 7,195,000 | 1,126.75 | 0.34% | -10.56% |
| ASTRAL | 599,775 | 2,047.85 | 0.20% | -9.58% |
(Increase in price and decrease in open interest)
Short build-up
| Stock | Current OI | CMP | Price change (%) | OI change (%) |
| IRCTC | 790 | 4.5 | -9.09% | 1663.16% |
| COFORGE | 4,050 | 37 | -8.98% | 1473.08% |
| ZEEL | 305 | 0.5 | -23.08% | 950.00% |
| DALBHARAT | 1,720 | 11.05 | -58.30% | 828.57% |
(Decrease in price and increase in open interest)
First Published: Aug 21, 2022 7:25 PM IST
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