Indian equity benchmarks slumped to two-month closing lows on Monday as the market continued to fall for the fourth session in a row, tracking weakness across global markets amid persistent concerns about slowing growth and steep hikes in COVID-era interest rates.
What do the charts suggest for Dalal Street?
The Nifty50 has formed a long bear candle on the daily chart with a gap-down opening, suggesting a downtrend in the market, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
Though the 50-scrip index has lost almost 1,000 points from the 18,000 mark, there is no confirmation of buying emerging from the lows, he said.
He sees the possibility of a bounce from crucial support at 16,800 in the short term.
Time to sell the rise in banking
Having faced extreme selling pressure from the higher levels following the Fed announcements, the Nifty Bank has breached crucial support at 40,000 on a closing basis, according to Kunal Shah, Senior Technical Analyst at LKP Securities.
"This confirms the breakdown... The index remains in a sell-on-rise mode with a hurdle at 40,500 and the next support visible at 39,000," he said.
Here are key things to know about the market ahead of the September 27 session:
SGX Nifty
On Tuesday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — rose as much as 79.5 points or 0.5 percent to 17,021 ahead of the opening bell on Dalal Street.
Global markets
Equities in other Asian markets saw mixed moves on Tuesday, as investors overlooked the Fed's third straight hike of 75 bps in the key rates last week but concerns persisted on strength of the global economy. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.2 percent at the last count.
Japan's Nikkei 225 was up 0.8 percent, China's Shanghai Composite flat and Hong Kong's Hang Seng down one percent.
S&P 500 futures were up 0.7 percent. On Monday, the three main Wall Street indices fell 0.6-1.1 percent, with the Dow Jones confirming a bear market, as investors fretted that the Fed's aggressive campaign against inflation could throw the US economy into a sharp downturn.
What to expect on Dalal Street?
HDFC Securities' Shetti believes the Nifty's short-term trend continues to be sharply negative.
"One can expect weakness to continue for the next 1-2 sessions. The lower 16,800 level is expected to offer a base for the market in the short term," he said.
Mohit Nigam, Head-PMS at Hem Securities, identified the following levels to watch out for:
| Index | Support | Resistance |
| Nifty50 | 16,800 | 17,400 |
| Nifty Bank | 38,000 | 39,500 |
Key moving averages
In a bearish signal, the Nifty has slid 3.6 percent below its long-term simple moving average.
| Period (No. of sessions) | SMA |
| 5 | 17,064.5 |
| 10 | 17,118 |
| 20 | 17,320.1 |
| 50 | 17,551.3 |
| 100 | 17,729.3 |
| 200 | 17,656.4 |
FII/DII activity
Foreign institutional investors (FIIs) remained net sellers of Indian shares for a fourth straight trading day on Monday, pulling out Rs 5,101.3 crore from Dalal Street, according to provisional exchange data. Domestic institutional investors, however, made net purchases of Rs 3,532.2 crore.
In August, they made net purchases to the tune of Rs 22,025.8 crore — the first month of net inflows after 10 straight months of outflows, whereas domestic institutional investors (DIIs) net sold shares worth Rs 7,068.9 crore.
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Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,500, with 1.7 lakh contracts, and the next highest at 17,700, with 1.4 lakh, according to exchange data. On the other hand, the maximum put open interest is at 16,000, with 1.4 lakh contracts, and at 17,000, with 1.3 lakh.
This indicates a strong hurdle at 17,500 and an immediate base at 17,000.
Long build-up
Here are two stocks that saw an increase in open interest as well as price:
| Stock | Current OI | CMP | Price change | OI change |
| CIPLA | 7,677,150 | 1,064.80 | 0.19% | 14.04% |
| ASIANPAINT | 4,893,000 | 3,440 | 1.06% | 0.32% |
Long unwinding
| Stock | Current OI | CMP | Price change | OI change |
| RBLBANK | 47,550,000 | 112.35 | -8.62% | -27.74% |
| FSL | 15,392,000 | 103.85 | -0.81% | -24.39% |
| GUJGASLTD | 5,737,500 | 484.7 | -0.51% | -22.92% |
| M&MFIN | 21,104,000 | 180.65 | -7.43% | -20.13% |
| SAIL | 77,574,000 | 74.4 | -4.68% | -19.96% |
(Increase in price and decrease in open interest)
Short covering
| Stock | Current OI | CMP | Price change | OI change |
| LTTS | 893,000 | 3,440.15 | 0.89% | -22.06% |
| IPCALAB | 1,142,700 | 893.9 | 2.09% | -20.14% |
| PERSISTENT | 583,500 | 3,175 | 0.64% | -17.46% |
| METROPOLIS | 804,000 | 1,505.25 | 3.27% | -16.46% |
| LUPIN | 7,112,800 | 652.8 | 0.53% | -14.62% |
(Increase in price and decrease in open interest)
Short build-up
| Stock | Current OI | CMP | Price change | OI change |
| PIIND | 1,696,000 | 3,012.50 | -1.66% | 32.10% |
| POWERGRID | 37,662,300 | 200.65 | -1.21% | 23.10% |
| BHEL | 99,246,000 | 54.85 | -5.59% | 12.27% |
| NAUKRI | 1,671,750 | 3,721.80 | -4.41% | 9.78% |
| POLYCAB | 638,700 | 2,457.35 | -4.09% | 9.49% |
(Decrease in price and increase in open interest)
First Published: Sept 26, 2022 7:04 PM IST
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