Indian equity benchmarks extended gains to a second straight day on Wednesday, as investors globally looked past concerns about the Omicron variant of COVID-19. Broad-based gains pushed the headline indices higher.

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Broader markets also strengthened, with the smallcap gauge jumping most in two months.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a long bullish candle on the daily chart, suggesting the continuation of a pullback rally following a sharp decline, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

"The current upmove is in line with the formation of a lower top, but there is no confirmation of any lower top reversal yet at the highs," he said.

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More upside ahead?

Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, is of the view the uptrend wave is likely to continue in the near future.

"Support has shifted to 16,800 from 16,700. As long as the index trades above this zone, positive momentum will continue up to 17,020-17,100 levels. On the flipside, a dismissal of 16,800 could trigger further weakness till 16,720-16,675 levels," he said.

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

SGX Nifty

At 7:53 am on Thursday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty50 index -- were up 91.5 points or 0.5 percent at 17,069.5, suggesting a positive opening ahead on Dalal Street.

Global markets

Equities in other Asian markets continued to rally as markets took cheer from positive signs about the impact of the omicron variant of COVID-19. MSCI's broadest index of Asia Pacific shares outside Japan was up 0.5 percent at the last count. Japan's Nikkei 225 was up 0.3 percent and Hong Kong's Hang Seng 0.6 percent, but China's Shanghai Composite was down 0.1 percent.

S&P 500 futures were flat in Asia. On Wednesday, the three main Wall Street indices ended 0.7-1.2 percent higher in a broad rally after upbeat economic data.

What to expect on Dalal Street

HDFC Securities' Shetti believes the Nifty is entering crucial resistance at 17,000-17,200 levels. "There is a higher chance that it will reverse direction in the next few sessions. Immediate support is placed at 16,830," he said.

Ruchit Jain, Trading Strategist at 5paisa.com, expects the Nifty to see some more pullback towards 17,150-17,200 in the next couple of sessions. Volatility is expected to settle down towards the year-end, said Jain, advising traders to look for stock-specific opportunities. "Stocks that are trading near their respective supports and have corrected sharply recently could witness some sharp pullbacks," he said.

"The Nifty Pharma index has formed a support base in the 13,000-13,200 range, and the space is expected to deliver good returns in the near term. Short-term traders can look for opportunities from this sector," he added.

Key levels to watch out for

Nifty50: Immediate support for the index is expected at 16,500 and immediate resistance at 17,200, according to Mohit Nigam, Head-PMS at Hem Securities.

Bank Nifty: For the banking index, Nigam sees immediate support at 34,600 and an immediate hurdle at 35,500.

FII/DII activity

Foreign institutional investors (FIIs) net offloaded Indian equities worth Rs 827.3 crore on Wednesday. However, domestic institutional investors made net purchases of Rs 1,593.4 crore, according to provisional exchange data.

Call/put open interest

The maximum call open interest is accumulated at the strike price of 17,200 with 1.4 lakh contracts, and the maximum put open interest at 16,800 with one lakh contracts, according to exchange data. This suggests resistance at 17,200 and support at 16,800.

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 as well as price)

Short-covering

(Decrease in open interest and increase in price)

Short build-up

(Increase in open interest and decrease in price)

52-week highs

In the BSE 500 pack, Minda Industries and TCI Express were the only stocks to hit 52-week highs for a second back-to-back session.

52-week lows

Only one stock in the broadest index on the bourse hit a 52-week low: Wockhardt.

Volatility gauge

NSE's VIX index -- which measures the expectation of volatility in the market -- dropped 5.5 percent to 16.6 on Wednesday, cooling off sharply for a second straight day.

(Edited by : Abhishek Jha)

First Published:Dec 22, 2021 6:53 PM IST