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Indian equity benchmarks — BSE Sensex and NSE Nifty50 — halted a three-day winning run on Thursday amid weakness in financial and IT stocks. However, strength in auto stocks and select heavyweights such as ITC and Titan lent some support.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a long bear candle on the daily chart, signalling a downward reversal pattern of the recent uptrend.

“This is not a good sign and one may expect further downside in the market ahead,” Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said.

More selling on cards

Bouts of selling could be seen in the market at regular intervals, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

“Concerns about geopolitical tensions, a likely US rate hike and rising oil prices are still a potent threat to the market… After a promising uptrend rally, the Nifty found resistance near the important retracement level of 17,800. For traders, 17,500 and 17,400 would act as strong support and immediate resistance could be at 17,700 -17,800,” he said. 

Here are key things to know about the market before the February 4 session:

Global markets

European share markets began Thursday’s session on a negative note as focus shifted to the European Central Bank’s policy meeting amid concerns about inflation in the euro zone.

The pan-European Stoxx 600 index was down 0.7 percent at the last count.

S&P 500 futures were up 0.9 percent, suggesting a positive start ahead on Wall Street.

What to expect on Dalal Street

HDFC Securities’ Shetti believes the benchmark index has reversed its short-term uptrend,  and immediate resistance is now placed at 17,650. “Intense follow-through weakness from here could open more downside in the near term. A confirmation of the reversal is likely to drag the Nifty to 17,000-16,800 levels,” he said. 

The Nifty’s short-term trend will turn bullish only after a close above the stiff resistance level of 17,800, said Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments. 

He sees good support at 17,200, only a break below which on a closing basis will lead to resumption of the current bear market. “We are currently in neutral territory and hence a ‘wait and watch’ strategy should be adopted,” he advised. 

Key levels to watch out for

Nifty50: Immediate support for the index is expected at 17,500, and resistance at 17,700, according to Mohit Nigam, Head-PMS at Hem Securities.

Nifty Bank: For the banking index, he sees immediate support at 38,800 and resistance at 39,300.

Provisional exchange data shows foreign institutional investors (FIIs) net sold Indian equities worth Rs 183.6 crore on Wednesday. However, domestic institutional investors made net purchases of Rs 426 crore.

Exchange data shows the maximum call open interest is accumulated at the 17,700 strike price, with 1.5 lakh contracts, and 18,000, with 1.4 lakh contracts. On the other hand, the maximum put open interest is placed at 17,200, with nearly 96,000 contracts.

This suggests that 17,700 has become a major hurdle for the Nifty, with meaningful support being at 17,200.

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 (%)
COROMANDEL 10,43,750 821.9 3.84% 32.99%
GAIL 2,73,95,100 147.4 0.96% 23.67%
TITAN 61,62,375 2,468.95 0.04% 21.41%
BANDHANBNK 1,99,18,800 325.05 0.99% 11.94%
GSPL 13,92,300 316.45 0.49% 9.40%

Long unwinding

Symbol Current OI CMP Price change (%) OI change (%)
NTPC 5,68,63,200 136.8 -0.73% -2.92%
INDHOTEL 1,82,92,056 218.75 -0.34% -1.89%
IPCALAB 12,58,650 1,045 -1.27% -1.79%
RAMCOCEM 21,55,600 873 -1.78% -1.46%
IDEA 66,99,70,000 11.25 -2.17% -0.94%

(Decrease in open interest as well as price)

Short-covering

Symbol Current OI CMP Price change (%) OI change (%)
VOLTAS 37,73,000 1,217.05 0.56% -4.68%
GNFC 27,50,800 467 0.66% -3.02%
COLPAL 26,32,350 1,472 0.52% -2.05%
HINDCOPPER 1,50,45,700 129.1 0.74% -0.80%
GRANULES 1,26,69,700 323.65 0.57% -0.61%

(Increase in price and decrease in open interest)

Short build-up

Symbol Current OI CMP Price change (%) OI change (%)
ITC 1,60,000 2.3 -16.36% 4900.00%
TITAN 30,375 10.6 -19.39% 3950.00%
MUTHOOTFIN 54,000 46.2 -42.32% 3500.00%
DIVISLAB 2,000 10.15 -18.47% 1900.00%
BALKRISIND 75,600 10.9 -22.14% 1618.18%

(Increase in open interest and decrease in price)

52-week highs

As many as 14 stocks in the BSE 500 pack hit 52-week highs, including Bank of Baroda, AU Small Finance Bank, Canara Bank, Gujarat Fluorochemicals, Deepak Fertilisers, Bharat Dynamics, GHCL, Amber and Asahi.

52-week lows

Two stocks in the broadest index on the bourse hit 52-week lows: Ceat and Akzo Nobel.

Volatility gauge

NSE’s India VIX index — which gauges the expectation of volatility in the market — rose 2.7 percent to settle at 19.2 on Thursday, having jumped as much as 5.1 percent during the session.

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