Indian equity benchmarks made a comeback on Tuesday following two days of deep losses. The recovery was broad-based with financial, IT, oil & gas and metal stocks being the maximum contributors to the gains in both Sensex and Nifty50. The Bank Nifty jumped 2.5 percent -- its biggest single-day gain since May 21.

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All eyes will be on the outcome of the RBI policy review due on Wednesday.

What do the charts suggest for Dalal Street now?

The 50-scrip index has formed a reasonable bull candle on the daily chart, besides Monday's long bear candle, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

"This candle pattern indicates the formation of an inside day type pattern, which could have a positive impact in the next session," he said.

Bank Nifty in the spotlight

Sameet Chavan, Chief Analyst, Technical and Derivatives at Angel One, stuck with his view that Bank Nifty could become the deciding factor for the market going ahead.

"Since the RBI is going to announce its monetary policy, further action in the market will be dictated by this heavyweight influential basket... We expect the Nifty to remain in a range of 400-500 points before it breaks out in either direction. On the higher side, 17,300 followed by 17,500 are to be viewed as immediate hurdles; where 17,000 has become sacrosanct support now," he said.

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

SGX Nifty

At 7:47 am on Wednesday, Singapore Exchange (SGX) Nifty futures were up 101.5 points or 0.6 percent at 17,312.5, suggesting a gap-up opening ahead on Dalal Street.

Global markets

Equities in other Asian markets extended gains on Wednesday amid a global relief rally amid positive news in early reports about the potential impact of the Omicron variant of COVID-19. MSCI's broadest index of Asia Pacific shares outside Japan was up 0.4 percent in early hours. Japan's Nikkei 225 index was up 1.1 percent and China's Shanghai Composite 0.1 percent.

S&P 500 futures were up 0.3 percent in Asia. On Tuesday, the three main Wall Street indices finished 1.1-3 percent higher backed by a rally in technology stocks, as investors shrugged off concerns about the Omicron variant of COVID-19.

What to expect on Dalal Street

HDFC Securities' Shetti believes the bounce on the Nifty50 could be short-lived. "One may expect selling pressure to emerge from crucial overhead resistance at 17,550-17,600 levels in the near term," he said.

Sideways action can continue before the index prepares for a larger upmove, according to Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas. "Structurally, the swings in both the directions over the last few sessions are part of a base formation process. In terms of the price pattern, the index has the potential to form a base triangle... On the higher side, 17,500 will continue to act as a key barrier whereas 17,000-16,900 will be the lower end of a potential base triangle," he said.

Key levels to watch out for

Nifty50: For the next couple of sessions, immediate support for the index is expected at 17,000, and immediate resistance at 17,300-17,400 levels, according to Ruchit Jain, Trading Strategist at 5paisa.com.

Bank Nifty: The banking index has formed a higher low from its 200-day moving average, and momentum could lead it towards its 20-exponential moving average, which is around 37,150, said Jain, who expects immediate support at 36,350 and 36,200.

FII/DII activity

Foreign institutional investors (FIIs) net offloaded Indian equities worth Rs 2,585 crore on Tuesday. However, domestic institutional investors saved the day, making net purchases of Rs 2,605.8 crore, according to provisional exchange data.

Call/put open interest

The maximum call open interest is at the strike price of 18,000 with 1.7 lakh contracts, and the next highest at 17,500 with 1.3 lakh contracts, according to exchange data. The maximum put open interest is at the strike price of 17,000 with 1.1 lakh contracts. This suggests immediate resistance at 17,500 followed by the major hurdle of 18,000, and support at 17,000.

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

Short-covering

Short build-up

(Increase in open interest and decrease in price)

52-week highs

BEML, Glaxo, IFCI, Jamna Auto, Tanla, Torrent Power and LA Opala RG were the seven stocks in the BSE 500 universe that hit 52-week highs.

52-week lows

On the other hand, Lupin, MGL, Whirlpool, Strides Pharma, Indostar Capital, Johnson Controls-Hitachi AC and Gulf Oil Lubricants were the seven stocks in the broadest index on the bourse that hit 52-week lows.

Volatility index

NSE's India VIX index — which gauges the expectation of volatility in the near term — fell 8.1 percent to settle at 18.5 on Tuesday, its biggest drop in one week.

(Edited by : Abhishek Jha)

First Published:Dec 7, 2021 6:19 PM IST