Indian equity benchmarks rose to new record highs on Friday led by IT, pharma, metal and select financial stocks. The Nifty50 index closed above the 16,700 mark for the first time ever, ahead of Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium. Though the annual event has not sparked big moves in the past, it is being keenly watched this time around for more clarity on the US central bank's take on tapering of its heavy stimulus.

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Powell indicated in a highly anticipated speech that the Fed could start tapering its massive support to the economy by the end of the year, which was not as fast as many in the market had assumed. He said the US economy continued to make progress towards the central bank's benchmarks for reducing its COVID-era emergency programs, but stopped short of signaling the timing for any policy shift.

So, what do the charts suggest for Dalal Street?

The 50-scrip index formed a reasonable positive candle on the daily chart with a lower shadow, indicating an attempt of an upside breakout of the minor high low range in the last two sessions, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. The market is not showing any sharp profit booking after a new high formation, which signals chances of more upside in the short term, he said.

Largecaps to remain in focus

Siddhartha Khemka, Head - Retail Research at Motilal Oswal Financial Services, believes the overall trend of the market remains positive from a long-term perspective, on the back of the opening up of the economy, improving economic data points and a pickup in vaccinations.

"The result season is over with better-than-expected delivery and the vaccination drive going on in full swing. However the sharp outperformance in the past 18 months has led to concerns on valuations. Also the likely impact on liquidity due to changes in global monetary policy had investors concerned for the last few days. While midcap stocks have started to participate in the market for the last couple of days, we believe that largecap shares offer a better margin of safety in the current environment and could continue to remain in focus in the near term," he said.

Here are key things to know about the market before Monday's session:

SGX Nifty

Nifty futures trading on Singapore Exchange -- an early indicator of India's NSE Nifty50 benchmark index -- were up 94 points or 0.56 percent at 16,819 at 8:15 am on Monday, suggesting a positive start ahead on Dalal Street.

Also read: How will Jackson Hole meeting impact markets?

Global markets

Equities in other Asian markets started the week higher and the dollar was not far off two-week lows after Powell struck a more dovish tone than some investors expected in his long-awaited speech. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.32 percent, and Japan's Nikkei edged up 0.9 percent.

S&P 500 E-Mini futures were down 0.03 percent, indicating a flat start on Wall Street later in the day. On Friday, Wall Street's main indices extended gains as the Fed Chair signaled the US central bank will remain patient as it tries to nurse the economy back to full employment. The three main US benchmark indices closed half a percent higher each.

What to expect on Dalal Street

"Lack of strong selling enthusiasm at new highs has resulted in rangebound action and a small upside breakout. This is a positive indication and there is a possibility of further upside in the short term," said Shetti.

Rahul Sharma, Co-Founder of Equity99, expects IT, banking, pharma, FMCG and sugar stocks to be in focus on Monday.

Key levels to watch out for

Nifty50: The 16,650 will act as immediate support for the index, which, if broken, will might be followed by 16,575-16,500 levels, according to Sharma. He expects the 16,780 mark to act as a hurdle, and 16,840-16,900 levels once that level is breached.

Bank Nifty: For the banking index, support is expected at 35,450, 35,320 and 35,200 levels and resistance at 35,800, 36,000 and 36,200, he said.

FII/DII activity

Foreign institutional investors withdrew a net Rs 778.75 crore from the Indian capital market on Friday. However, domestic institutional investors saved the day, making net purchases of Rs 1,646.19 crore, exchange data showed.

Call/put open interest

There is a high degree of call open interest at the strike price of 16,800, with the maximum open interest at 17,000. On the other hand, the maximum put open interest is at the strike of 16,600, and next at 16,500, NSE data shows. This indicates that immediate resistance can be expected at 16,800, and support comes in at 16,600, and then 16,500.

Long build-up

Here are five stocks that saw an increase in open interest as well as price, suggesting a build-up of long positions:

Long unwinding

(Decrease in open interest and price)

Short-covering

(Decrease in open interest and increase in price)

Short build-up

(Increase in open interest and decrease in price)

Stocks hitting 52-week highs

Britannia, DMart, Fortis, HAL, SBI Life, Kajaria Ceramics, Mindtree, Naukri, Oil India, ABB Power Products and Systems India, ABB India, Alkem Laboratories, Carborundum Universal, L&T Infotech and L&T Technology Services were among the stocks that clocked 52-week highs.

Stocks hitting 52-week lows

Only one stock in the BSE 500 universe -- the broadest index on the bourse -- hit a 52-week low: Hero MotoCorp. Besides, CarTrade Tech, GR Infraprojects and Parle Industries also hit 52-week lows.

Volatility gauge

The India VIX index -- which measures the expectation of volatility in the market -- eased 0.97 percent to 13.41, having moved within a range of 12.94-13.76 on Friday as against its previous close of 13.54.

(Edited by : Aditi Gautam)

First Published:Aug 29, 2021 3:52 PM IST