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Indian equity benchmarks — BSE Sensex and NSE Nifty50 — extended losses to a second straight day on Friday, dragged by financial, IT and oil & gas shares, although gains in metal shares lent some support.
What do the charts suggest for Dalal Street now?
“The lack of sharp follow-through weakness on Friday could be a good sign for the bulls to make a comeback. The Nifty sustaining above 17,450 on Monday could bring a pullback rally in the market,” he said.
Banking stocks in the spotlight
Despite some profit booking, the 50-scrip index is likely to provide an exellent opportunity for traders as long as it holds sacrosanct support at 17,240 on a closing basis, Sameet Chavan, Chief Analyst-Technical & Derivatives at Angel One, told CNBCTV18.com.
“On the higher side, 17,700-17,800 are immediate levels to watch out for. If global markets support, we may see the Nifty surpass these hurdles to move towards the 18,000 mark. Banking remains the space to track as we expect major contribution to come from this heavyweight basket,” he said.
Here are key things to know about the market before the February 7 session:
SGX Nifty
At 7:50 am, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — were down 32 points or 0.2 percent at 17,458, suggesting a muted start ahead on Dalal Street.
Global markets
Equities in other Asian markets mostly eased on Monday after strong US jobs data allayed concerns about the global economy though also added to the risk of aggressive tightening by the Fed. MSCI’s broadest index of Asia Pacific shares outside Japan was down 0.3 percent.
Japan’s Nikkei 225 was down 0.8 percent and Hong Kong’s Hang Seng down 0.6 percent. China’s Shanghai Composite was up 1.8 percent.
S&P 500 futures were down 0.2 percent.
On Friday, Wall Street indices ended a choppy session on a mixed note, after Amazon’s positive earnings capped a run of mixed big tech numbers. The S&P 500 rose 0.5 percent and the tech stocks-heavy Nasadaq Composite surged 1.6 percent, though the Dow Jones slipped 0.1 percent.
What to expect on Dalal Street
HDFC Securities’ Shetti is of the view that short-term weakness in the market remains intact. “Overall weekly and daily chart patterns indicate higher chances of the Nifty moving below 17,450 levels this week, and such action is likely to bring the bears into action again. A sustainable move only above 17,800 levels could negate this bearish pattern,” he said.
Ruchit Jain, Lead Research at 5paisa.com, believes the Nifty50 has entered a consolidation phase after the Budget. This week, he suggests traders to be stock-specific and look for themes outperforming headline indices.
“From a near-term perspective, support for this corrective leg are seen around 17,430 and 17,315. On the flipside, 17,800 would be the pivotal point above which the index would resume its broader uptrend… FIIs have been sellers in the index futures segment with a net position on the short side, which remains a concern. For a resumption of the broader uptrend, participation from these stronger hands is required and one should keep a close watch on their positions,” he said.
Key levels to watch out for
Nifty50: Support for the index is expected at 17,400-17,250, and resistance at 17,800, according to Sachin Gupta, AVP-Research, Choice Broking
Nifty Bank: For the banking index, he sees support at 38,300 and resistance at 39,200.
Provisional exchange data shows foreign institutional investors (FIIs) net sold Indian equities worth Rs 2,267.9 crore on Friday. Domestic institutional investors (DIIs) made net purchases of Rs 622 crore.
Exchange data shows the maximum call open interest is accumulated at the 17,800 strike price, with 1.2 lakh contracts, and 18,000, with 1.1 lakh contracts. On the other hand, the maximum put open interest is placed at 17,000, with almost 54,000 contracts.
This suggest immediate resistance at 17,800 followed by more at 18,000, and strong support at the 17,000 mark.
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 (%) |
| TORNTPOWER | 28,33,500 | 573 | 6.99% | 29.96% |
| CHOLAFIN | 66,56,250 | 672 | 4.33% | 7.85% |
| HINDALCO | 2,73,91,000 | 524.65 | 2.29% | 5.08% |
| VOLTAS | 35,62,000 | 1,225 | 0.60% | 5.04% |
| GUJGASLTD | 20,50,000 | 683.85 | 0.34% | 5.00% |
Long unwinding
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| HONAUT | 8,940 | 44,572 | -3.12% | -16.95% |
| TITAN | 66,98,250 | 2,469.20 | -0.31% | -12.08% |
| INTELLECT | 3,26,250 | 744.35 | -0.92% | -8.74% |
| AMBUJACEM | 1,51,30,500 | 378.3 | -0.94% | -8.01% |
| ASTRAL | 8,42,875 | 2,176.15 | -0.38% | -7.67% |
(Decrease in open interest as well as price)
Short-covering
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| DALBHARAT | 5,13,750 | 1,935 | 0.64% | -10.46% |
| ULTRACEMCO | 18,68,200 | 7,430.50 | 0.47% | -6.70% |
| ASHOKLEY | 3,17,61,000 | 136.6 | 0.29% | -6.08% |
| APOLLOHOSP | 25,21,375 | 4,693 | 1.09% | -5.58% |
| GSPL | 14,41,600 | 318.95 | 0.57% | -5.54% |
(Increase in price and decrease in open interest)
Short build-up
| Symbol | Current OI | CMP | Price change (%) | OI change (%) |
| GODREJPROP | 46,02,975 | 1,518.90 | -8.91% | 26.81% |
| ALKEM | 2,60,200 | 3,469 | -1.74% | 14.99% |
| LUPIN | 69,26,650 | 875.75 | -2.79% | 10.04% |
| FSL | 1,03,58,400 | 148.95 | -6.88% | 9.59% |
| ESCORTS | 57,62,900 | 1,840 | -1.23% | 7.97% |
(Increase in open interest and decrease in price)
52-week highs
As many as eight stocks in the BSE 500 pack hit 52-week highs, including SBI, Sun Pharma, Brigade Enterprise, Cholamandalam Investment, Deepak Fertilisers and Gujarat Fluorochemicals.
52-week lows
One stock in the broadest index on the bourse hit a 52-week low: MCX.
Volatility gauge
NSE’s India VIX index — which gauges the expectation of volatility in the market — eased 1.4 percent to settle at 18.9 on Friday.
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