After losing over 500 points in two sessions, the Nifty 50 managed some gains on Monday, but not before having its fair share of volatility. The index traded in a 300-point range and saw wild intraday swings through the day.

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The Nifty 50 broke below multiple support levels, including Friday's low of 17,493. It eventually made a low of 17,405 before recovering nearly 250 points during the final hour of trade to end with gains.

Most of the volatility came from the Nifty Bank index, which at one point even threatened to break the 39,000 mark on the downside. The index traded in a 1,300-point range on Monday, eventually managing to eke out gains of 40-points towards closing after recovering nearly 1,000 points from the day's low.

Among the cues for today include the presentation of the Economic Survey before the Union Budget is tabled in parliament on Wednesday. Few Nifty 50 companies including Sun Pharma will also be reporting their results in today's trading session. Also on the radar would be Vodafone Idea's board meeting which will consider fund raising proposals.

Neil Bahal of Negen Capital PMS said that the correction provided a good opportunity for long-term investors as stocks got cheaper. "On the whole stocks were a little bit expensive in the general market, all the good companies that you like, they were outside of your comfort zone. So if they are becoming cheaper, I would not be the one to complain," he said.

What do the charts suggest for Dalal Street?

The Nifty 50's recovery from the day's low saw the formation of a positive candle on the daily chart with an upper and long lower shadow. Such a pattern, known as a high wave typical candle pattern signals high volatility in the market, according to Nagaraj Shetti of HDFC Securities. He further said that Monday's recovery could be a positive sign for the bulls to make a comeback.

Kunal Shah of LKP Securities expects the Nifty Bank index to trade in a broad range of 39,500 and 41,525 on the upside where put and call writing is seen respectively. In case the index manages to hold the 39,800 level on the downside, he expects a pullback rally towards levels of 41,000 - 41,500.

Here are key things to know about the market ahead of the January 31 trading session:

SGX Nifty

On Tuesday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty 50 index — gained 62.5 points or 0.35 percent to 17,767.5, thereby pointing to a positive opening for the market.

Global Markets

Markets in the Asia Pacific are trading mixed on Tuesday ahead of economic data reporting and a potential interest hike from the US Federal Reserve.

The Nikkei 225 is trading flat, the Topix is up 0.3 percent as Japan's unemployment rate came in-line with expectations. The Kospi is down 0.4 percent after Industrial output data was lower than estimates.

US markets ended lower overnight with the Dow Jones shedding 250 points, while the Nasdaq declining close to 2 percent. Despite the drop, the S&P 500 and the Dow are headed for their third monthly advance in four and are also set for their best month of January since 2019.

What to expect on Dalal Street

Rupak De of LKP Securities says that the Nifty 50 has a crucial near-term resistance at 17,750 - 17,800, which may limit further upsides on the index. On the other hand, a decisive move above that level can take the index back to 18,000 or 18,150. He sees support at levels of 17,400 - 17,350, which is Monday's low and slightly below that.

HDFC Securities' Shetti also says that a sustainable move above 17,800 will confirm a trend reversal on the upside. He said that the Union Budget presentation on Wednesday will set a fresh direction for the market in the short term.

Key levels to watch out for

For the weekly options expiry this Thursday, the 18,500 call of the Nifty 50 added 18.1 lakh shares in Open Interest, followed by the 17,800 call and 19,000 call, which added 10.7 lakh shares and 9.9 lakh shares respectively.

On the downside, the 16,100 put added 23.6 lakh shares in Open Interest while the 16,500 and 17,500 put saw Open Interest addition of 8.2 lakh and 7.5 lakh shares respectively.

Nifty 50's Put-Call Ratio remains at 0.77 from 0.74 on Friday. Ambuja Cements continues to remain in the F&O ban.

FII/DII activity

The FII sell figure on Monday was the highest since June 17, 2022.

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

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

First Published:Jan 31, 2023 6:35 AM IST