Experts had cited 18,070 to be the crucial support zone for the Nifty 50 index in case it managed to break below the 18,130 mark. And that turned out to be the saviour for the weekly options expiry session, as the Nifty 50 reversed exactly from its intraday low of 18,068. The index did manage to recover close to 60 points from the day's low, but ended with losses for the third straight day.

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NSE

Companies listed on the Bombay Stock Exchange (BSE) have lost market capitalisation worth nearly Rs 7 lakh crore over the last two trading sessions. The Broader market underperformed, with market breadth firmly in favor of the declines. Advance-Decline ratio for the session stood at 1:6.

Pankaj Murarka of Renaissance Investment Managers expects 2023 to be a year of bottom-up stock picking. In an interaction with CNBC-TV18 on Thursday, Murarka said that the next year will also be about macro headwinds as the cumulative rate hikes will have an impact on growth. "In that context, I think it's not about sectors or theme, but it's more about specific companies and bottoms up stock picking which is what the next year is going to be," he said.

What do the charts suggest for Dalal Street?

According to Nagaraj Shetti of HDFC Securities, the short-term trend of the Nifty 50 index remains weak and minor intraday pullback rallies are being sold into. The index also formed a long negative candle on its daily chart. The overlapping candles over the last few sessions reflect the inability of the market to sustain its gains, according to Shetti.

The Nifty Bank now trades below its key support zone of 42,500 and remains in sell-on-rise mode, according to Kunal Shah of LKP Securities. Shah further stated that the index will remain in this mode until it continues to trade below levels of 43,000, where the highest Open Interest is on the call side.

Here are key things to know about the market ahead of the December 23 session:

SGX Nifty

On Friday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — declined 75 points or 0.41 percent to 18,103, thereby pointing to a negative opening for the market.

Global Markets

Asian markets have opened lower this morning as investors digest some economic data from the region. The Nikkei 225 is trading 1 percent lower in the first hour of trade after Japan's core Consumer Price Index rising 3.7 percent in November, was the fastest since December 1981.

The Japanese Yen is at 132.38 against the US Dollar. South Korea's Kospi also trades with cuts of over a percent.

Sell-off also resumed on Wall Street after a brief respite. The Dow Jones ended 350 points lower overnight, while the S&P 500 declined nearly 1.4 percent. The tech-heavy Nasdaq registered losses of over 2 percent over fears of further monetary tightening.

What to expect on Dalal Street

Shetti of HDFC Securities believes that the Nifty 50 index currently has a cluster of support levels around the 18,100 mark and the area of the previous swing high as well. However, there are no indications of sustained buying emerging from those support levels. He further added that there are no signs of any bottom reversal forming around support levels. On the upside, immediate resistance is at levels of 18,240.

The Nifty Bank index's next support zone on the downside stands at levels of 42,000. Failure to hold those may drag the index down to levels of 41,500 or 41,000, according to LKP's Shah.

Key levels to watch out for

For the final weekly options expiry of the year, the Nifty 50's 18,200 call added over 44 lakh shares in Open Interest, followed by the 18,400 call (added 31.7 lakh) and 18,300 call (added 21 lakh).

On the downside, the 17,900 put saw maximum Open Interest addition with 9 lakh shares, followed by the 18,000 and the 17,800 put, both of which saw addition of 4.7 lakh shares in Open Interest.

GNFC and IRCTC are out of the F&O Ban from today's trading session. Indiabulls Housing Finance is now the only stock that remains in the ban period.

FII/DII activity

Sudip Bandopadhyay, Group Chairman of Inditrade Capital calls this phase to be par for the course after the run up the market as seen. He does not want to read too much into this correction as it is a combination of multiple factors like caution, profit-booking as well as the year-end.

Long build-up

Here are stocks that saw an increase in open interest as well as price:

Short build-up (Decrease in price and increase in open interest)

Long Unwinding (Decrease in price and in open interest)

Also Read: Stocks to Watch: Reliance Industries, JK Cement, Zydus Life, Biocon, RVNL, Defence stocks, Lupin and more