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Indian equity benchmarks halted a three-day winning run on Tuesday, dragged by losses in financial, IT and oil & gas shares, though gains in auto and metal stocks lent some support.

The bulls helped the Nifty50 find support at the 16,500 mark, where analysts believe a near-term cushion lies.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a doji type candle on the daily chart, suggesting a temporary halt in upside momentum, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

The formation of higher tops and higher bottoms is intact on the daily timeframe, which indicates the possibility of another minor higher bottom formation in the next few sessions, he said.

Milestone 16,400 is behind

Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, sees key resistance for traders at 16,700 on the 50-scrip index, below which, he believes, it could retest the 16,450-16,400 zone.

A fresh uptrend rally is possible only after the index breaks out of the 16,700 range, following which it above which it could move up to 16,775, said Chouhan, who believes the larger texture of the market is still on the positive side.

Here are key things to know about the market before the June 1 session:

SGX Nifty

Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — fell as much as 120 points or 0.7 percent to 16,440 early on Wednesday, suggesting a lower opening ahead on Dalal Street.

Global markets

Equities in other Asian markets fell on Wednesday amid persistent concerns about investors worried about inflation and its impact on global growth. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.8 percent in early hours.

China's Shanghai Composite was down 0.4 percent and Hong Kong's Hang Seng 0.8 percent. Japan's Nikkei 225, however, rose 0.7 percent.

S&P 500 futures were up 0.3 percent. On Tuesday, the three main Wall Street indices fell as soaring oil prices and hawkish comments from a Fed official spooked investors. The S&P 500 closed 0.6 percent lower, and the Dow Jones and the Nasdaq Composite dropped 0.7 percent and 0.4 percent respectively.

What to expect on Dalal Street

HDFC Securities' Shetti is of the view that the Nifty50's near-term uptrend remains intact.

"The consolidation movement or minor downward correction could continue for the next 1-2 sessions, which is likely to prepare a base for another round of sharp upmove in the index in the near term," he said.

Important levels to track

The Nifty50 still has 681 points to gain to reclaim its long-term simple moving average.

Mohit Nigam, Head-PMS at Hem Securities, identified the following resistance and support levels:

FII/DII activity

Call/put open interest

The maximum call open interest is accumulated at the strike price of 17,000, with 2.1 lakh contracts, and the next highest at 17,200, with more than 89,000, according to exchange data.

On the other hand, the maximum put open interest is at 16,000, with 1.2 lakh contracts, and 16,500, with more than one lakh contracts.

This suggests immediate resistance at 17,000 and immediate support at 16,500.

Long build-up

Here are five stocks that saw an increase in open interest as well as price:

Long unwinding

(Decrease in open interest as well as price)

Short covering

(Increase in price and decrease in open interest)

Short build-up

(Decrease in price and increase in open interest)

52-week highs

A total of eight stocks on the BSE 500 — the broadest index on the bourse — touched the milestone: Mahindra & Mahindra, Hindustan Aeronautics, EID Parry, Fine Organic, CreditAccess, Schaeffler, AIA Engineering and Timken.

52-week lows

On the other hand, six stocks hit 52-week lows: Natco Pharma, Bajaj Consumer, Equitas Small Finance Bank, Jubilant Pharmova, Hikal and Anupam Rasayan.

Fear gauge

The India VIX — known in market parlance as the fear gauge — rose 2.5 percent to settle at 20.5 on Tuesday.

First Published:May 31, 2022 9:28 PM IST