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Indian equity benchmarks suffered their worst fall in more than two months on Monday amid weakness across global markets, as investors remained on the back foot amid fears of a global slowdown.

The India VIX index — also known in market parlance as the fear index — jumped four percent, one of its biggest single-day gains so far this month.

What do the charts suggest for Dalal Street?

The Nifty50 has formed a long bear candle on the daily chart in a negative sign, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

"This is a signal that the bears are in the driver's seat," he said.

Brace for volatility

"The sentiment could remain volatile in the coming sessions as the focus would shift back to global concerns such as falling crude oil prices amid weakening demand and the US-China tussle over Taiwan," said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.

The expiry of monthly derivatives (futures and options) contracts is due on Thursday.

"The sharp intraday sell-off and a bearish candle on the daily charts suggest the continuation of weakness in the near future. But a quick pullback rally is likely if the index trades above key resistance at 17,575, below which, the correction wave may continue till 17,400-17,350 levels," he said.

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

Global markets

Equities in other Asian markets fell on Tuesday following a sell-off on Wall Street overnight, as nervousness persisted about a Fed gathering this week in Jackson Hole where policymakers are expected to reinforce a strong commitment to stamp out inflation.

MSCI's broadest index of Asia Pacific shares outside Japan was down 0.7 percent at the last count. Japan's Nikkei 225 was down 1.2 percent, China's Shanghai Composite 0.4 percent and Hong Kong's Hang Seng 0.7 percent.

S&P 500 futures eked out a gain of 0.1 percent. On Monday, the S&P 500 dropped 2.1 percent, the Dow Jones 1.9 percent and the tech stocks-heavy Nasdaq Composite 2.6 percent.

What to expect on Dalal Street

HDFC Securities' Shetti believes the 50-scrip index's short-term trend remains negative.

He expects support around 17,330 and then 16,900 in the next few sessions and immediate resistance at 17,600.

Key moving averages

Monday's fall has widened the Nifty50's distance from its long-term moving average to six percent from about four percent.

Mohit Nigam, Head-PMS at Hem Securities, identified the following support and resistance levels:

FII/DII activity

Call/put open interest

The maximum call open interest is accumulated at the strike price of 18,000, with 2.7 lakh contracts, and the next highest at 17,600 and 18,200, with 1.6 lakh each, according to exchange data.

On the other hand, the maximum put open interest is at 17,000, with 1.2 lakh contracts, and at 17,500, with 1.1 lakh.

This indicates immediate resistance at 17,600 and a major hurdle at 18,000, and significant support at 17,000.

Long build-up

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

Long unwinding

(Increase in price and decrease in open interest)

Short covering

(Increase in price and decrease in open interest)

Short build-up

(Decrease in price and increase in open interest)

52-week highs

A total of eight stocks in the BSE 500 universe — the broadest index on the bourse — hit 52-week highs: ITC, Adani Power, Torrent Power, ELGI Equipments, Grindwell Norton, KSB, Phoenix Mills and Solar Industries.

52-week lows

On the flipside, four scrips hit 52-week lows: Biocon, Sanofi, Metropolis and Alembic Pharma.

First Published:Aug 22, 2022 6:48 PM IST