India's benchmark Nifty 50 index may remain under pressure on the last trading day of the week after witnessing its worst single-day drop since October. The declines on the weekly options expiry session took the Nifty 50 below key support levels and charts are now pointing towards more downside.

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Technology names continued to lead the losses on Thursday with Tech Mahindra, Infosys and TCS counting among the top 10 losers on the Nifty 50. 44 out of the 50 index constituents ended with losses on Thursday.

Stocks like Britannia managed to buck the trend, even end at a 52-week high.

In an interaction with CNBC-TV18 on Thursday, Jyotivardhan Jaipuria of Valentis Advisors said that a couple of conditions will challenge the market going into the new year. On one hand, he expects inflation to cool-off, thereby slowing down the pace of the Fed rate hikes, but on the other hand, recessionary conditions may start to increase and thereby hurt earnings.

"I think next year, you guys will do a zero to maybe a slight negative earnings growth," he said.

What do the charts suggest for Dalal Street?

According to Nagaraj Shetti, technical research analyst at HDFC Securities, a long bear candle was formed on Nifty 50's daily chart on Thursday after a small bounce over the last few sessions. "This pattern indicates a sharp downward reversal in the market after the formation of a lower top on Wednesday at 18,696 levels," he said. "This is not a good sign and indicates more weakness in the short-term."

A sharp drop in the Nifty Bank index after a two-month rally has turned it into a sell-on-rise candidate, according to Kunal Shah of LKP Securities, who believes that the index will have to surpass levels of 44,000 on a closing basis to resume its uptrend. The Nifty Bank index shed nearly 600 points on Thursday.

Here are key things to know about the market ahead of the December 16 session:

SGX Nifty

On Friday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — declined 101 points points or 0.55 percent to 18,358.5, thereby pointing to a gap-down opening for the market.

Global Markets

Asian markets have opened lower following the lead on Wall Street as recession fears grow. The Nikkei 225 index is trading 1.4 percent lower while the Topix declined 0.85 percent. South Korea's Kospi is also trading with losses of 0.7 percent.

Wall Street also sold-off sharply on Thursday after retail sales data showed that the Fed's rate hikes are tipping the economy into a recession. The Dow Jones' 750-point drop was its worst day in three months. The S&P 500 shed 2.5 percent and the Nasdaq declined 3.2 percent, stretching its losses for the year to 31 percent.

What to expect on Dalal Street

Neelkanth Mishra of Credit Suisse expects Earnings per Share in financial year 2024 to be 12-15 percent higher and while India's risk premium to global price-to-earnings has corrected, it is unlikely to rebound to previous levels. Among sectoral bets, he highlighted banks, cement and construction as the ones to be with, adding that IT and Metal companies could come under some pressure.

Shetti of HDFC Securities sees an immediate support for the Nifty 50 index at levels of 18,350 and a move below this can drag the index to its next support zone of 18,150 or 18,100 in the short-term. On the upside, levels of 18,550 has now become a resistance for the Nifty 50.

In case follow-up selling continues in the Nifty Bank, it may drag the index to levels of 43,000 or 42,800 on the downside, according to LKP's Shah.

Key levels to watch out for

For the weekly options expiry on December 22, the 18,600 call strike of the Nifty 50 added 52.8 lakh shares in Open Interest followed by the 18,500 call and 18,700 call which added 38.2 lakh and 25.8 lakh shares respectively.

On the downside, the 18,400 put strike added 14.5 lakh shares in Open Interest along with the 18,200 put (14.3 lakh shares) and the 18,300 put (7.98 lakh shares).

FII/DII activity

Long build-up

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

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

Short Covering (Increase in price and decrease in open interest)

Long Unwinding (Decrease In Price & Open Interest)

First Published:Dec 16, 2022 6:42 AM IST