The Nifty 50 index formed a new "lower bottom" on its daily timeframe chart on Monday at levels of 18,244 and bounced from those levels, ending the session with gains. Analysts believe that the pullback rally on the index can continue for another 1-2 sessions.

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Indian equities snapped a two-day drop on Monday led by stocks like Reliance Industries, HDFC, and ITC, while technology names like Infosys and TCS continued to witness selling pressure. Auto stocks were also among the top gainers on the Nifty 50 index on Monday.

In an interaction with CNBC-TV18 on Monday, Gopal Agrawal, senior fund manager at HDFC AMC said that he expects the market to trade in a band until the next earnings season, which will possibly give a direction to this market. "Definitely external pressures are there while the domestic news is quite positive. So, I would say there will be tug of war till the next earnings season," he said.

What do the charts suggest for Dalal Street?

According to Nagaraj Shetti of HDFC Securities, the odds of some more upside bounces can be in store for the short term on the Nifty 50 after Monday's upmove. However, the index continued to have a negative "lower top, lower bottom" chart pattern on the daily timeframe chart.

With regards to the Nifty Bank, the bulls managed to defend the support of 43,000 on the downside and also saw buying momentum through Monday's session. The index remains in a broad range of 43,000 - 44,000, according to Kunal Shah of LKP Securities. "A break on either side of the range will provide a trending move," he was quoted as saying.

Here are key things to know about the market ahead of the December 20 session:

SGX Nifty

On Tuesday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — declined 44 points or 0.24 percent to 18,443, thereby pointing to an opening with a negative bias for the market.

Global Markets

Asian equities have opened mixed this morning ahead of a key rate decision from the Bank of Japan. The Nikkei 225 index is trading 0.2 percent higher, as is the Topix. The Japanese Yen has weakened 0.15 percent to 137.10 against the US Dollar. However, the Kospi in South Korea is down 0.45 percent and the S&P / ASX 200 in Australia is trading with cuts of 0.75 percent.

Wall Street had another negative session on Monday, as hopes for a Santa Claus rally are fast fading. The Dow Jones shed over 150 points while the S&P 500 declined 0.9 percent. The tech-heavy Nasdaq lost 1.5 percent during Monday's session.

What to expect on Dalal Street

HDFC Securities' Shetti believes that the immediate resistance to watch out for on the Nifty 50 index is around 18,500 - 18,550 levels while the next support on the downside is placed at 18,250. He expects this upside bounce to continue for the next 1-2 sessions.

In a note released last week, broking firm Nomura has set a 2023 target of 19,030 for the Nifty 50 index, which implies a potential upside of only 2-3 percent. Growth is the key concern according to the brokerage and it expects the medium-term earnings growth to depend largely on the broader economic recovbery.

"Economic slowdown, higher commodity prices and higher energy prices (geopolitics) are the key variables that present risks to corporate earnings," it wrote in the note.

Rupak De of LKP Securities also expects the trend in the short-term to remain positive as long as the Nifty 50 sustains above levels of 18,350.

Key levels to watch out for

For the weekly options expiry this Thursday, the 18,600 strike call had the maximum open interest addition on Monday with 10.5 lakh shares. In addition, the 18,500 call and the 18,700 call also added 8.1 lakh and 7.9 lakh shares respectively in open interest.

On the downside, the 18,300 strike put saw maximum addition of 44.3 lakh shares in Open Interest, followed by the 18,200 put with 23.7 lakh shares and the 18,100 put with 4.74 lakh shares.

Stocks like Balrampur Chini, IRCTC, Punjab National Bank, Indiabulls Housing Finance, Delta Corp and BHEL continue to remain in the F&O ban.

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)

Also Read: Stocks to watch: Dabur India, Hinduja Global, Sterling & Wilson, Just Dial and more

First Published:Dec 20, 2022 5:58 AM IST