The Nifty 50 index moved in a range of less than 200 points on Friday, trading between 17,421.8 and 17,599.8. NSE Nifty 50 and BSE Sensex ended with cuts, closing in the red for the sixth session straight. Broader market indices mirrored the losses in the headline indices.

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The indices erased gains of previous three weeks and Sensex and Nifty 50 ended 2.5 percent lower each for the week ended February 24. Nifty Bank slipped three percent and Midcap index nearly two percent in the week. All sectoral indices, too, recorded losses.

Friday marked one month of the US-based short-seller Hindenburg research's report that contained allegations of fraud against the Adani Group. Since then, the group market capitalisation has more than halved from its peak. The shares of Adani Enterprises, Adani Green, Adani Power, Adani Transmission, ended five percent lower on Friday.

BSE-listed companies have erased market capitalisation worth Rs 8.25 lakh crore in the last five trading sessions, including a loss of Rs 76,000 crore on Friday.

"The domestic market is broadly demonstrating a lack of confidence, registering its sixth consecutive day of losses despite global markets turning green. Continued selling in the domestic market by FIIs is acting as an overhang in sustaining the early gains. Crude oil prices rallied as the prospect of lower Russian exports outweighed rising US inventory," said Vinod Nair, Head of Research at Geojit Financial Services.

What do the charts suggest for Dalal Street?

According to Rupak De, Senior Technical Analyst at LKP Securities, the Nifty has fallen back into the falling channel and that heightens the chances of further downsides.

"The 50DMA and 14DMA are in a bearish crossover. Also, the current value is sitting well below the critical near-term moving averages, with the momentum oscillator RSI (14) slipping below the reading of 50. The current set-up is likely to keep the Nifty under pressure, with a potential downside towards 17150–17200 over the short term. On the higher end, crucial resistance is placed at 17800," he said.

According to Nagaraj Shetti of HDFC Securities, a long bear candle was formed on the daily chart on Friday, which indicated a down trend continuation pattern. He added that though, Nifty is placed near the crucial support of 17450-17500 levels, there are no sign of any reversal pattern unfolding at the lows. New swing low has been formed at 17421 levels.

On the weekly chart, Shetti said, Nifty formed a long bear candle, which indicated a sharp reversal in the market this week after the recent upside bounce. The negative chart pattern like lower tops and bottoms was formed on the weekly chart and Nifty is currently on the way down to form a new lower bottom of the sequence (below 17353), he said.

Here are key things to know about the market ahead of the trading session on February 27:

SGX Nifty

On Monday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty 50 index — increased 11 points or 0.06 percent to 17,531.5, thereby pointing to a flat to negative start for the Indian market.

Global Markets

Benchmark indices on Wall Street ended Friday's session lower, posting the biggest weekly drop of the year as investors prepare for possibility of further rate hikes by the Federal Reserve. The Dow Jones ended three percent lower for the week, its biggest weekly decline in five months. The Wall Street index ended lower for fourth week in row, longest losing streak in 10 months.

On Friday, the Dow Jones ended one percent down, S&P 500 lost 1.1 percent while the Nasdaq declined 1.7 percent.

What to expect on Dalal Street

Rajesh Kothari, AlfAccurate Advisors is reasonably positive on market. "It is a good time, there is a decent time correction, there is a decent price correction and earnings have done reasonably well." He added that correction must be taken as an opportunity to further add to equity class. "I think from here, or we are going to see probably another two or three months of this, a little bit of noise from the global market, but after that, probably most of the things are going to favour."

The gap down opening on 22nd February has created a runaway gap at 17,775 levels on the daily chart and that unfilled gap will act as an immediate overhead resistance for the index, as per Rohan Patil, Technical Analyst, SAMCO Securities. Index on the daily chart has slipped below its important averages (100 & 200 EMA), which reinforces that bears are in control, according to him.

According to Patil, immediate support for the Nifty is placed at around 17,350 levels which is the Budget days low. In case prices drift below these levels, then 17,050 – 17,000 will be on the cards. "Only a sustained close above the 17,750- 17,800 zone is likely to trigger bullish momentum toward the 18,100 – 18,200 levels."

The Nifty Banak index undertone remains bearish and one should keep a sell-on-rise approach, according to LKP Securities' Kunal Shah. "The index will witness large moves once it breaks out of the mentioned range. The momentum indicator RSI is trading below the level of 30 which confirms the weakness," Shah said.

Key Levels To Track

For Thursday's weekly options expiry, the 17,600 strike call of the Nifty 50 added 51 lakh shares in Open Interest, followed by the 17,700 call and the 18,000 call, both of which saw Open Interest addition of 28 lakh shares each.

On the downside, the 17,000 put added 22.2 lakh shares in Open Interest, while the 17,600 put added 19.5 lakh shares and the 17,400 put added 16.5 lakh shares in Open Interest.

Nifty 50's put-call ratio currently stands at 0.79 compared to 0.92 on Thursday. No stocks are currently in the F&O ban.

FII/DII activity

For the year so far, FPIs have sold equities worth Rs 31,164 crore, according to CDSL data. For the first half of February, FPIs turned buyers into financials, according to VK Vijayakumar of Geojit Financial Services. FPIs were also buyers in capital goods, IT and healthcare. Selling was seen in oil & gas, metals and power. "Anticipation of the Fed turning more hawkish in the context of slow disinflation in the US might lead to more capital outflows from emerging markets," he said.

Long Build-up (Increase In Price and Open Interest)

Short Build-up (Decrease In Price and Increase In Open Interest)

Short Covering (Increase In Price and Decrease In Open Interest)

First Published:Feb 27, 2023 5:40 AM IST