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Indian equity benchmarks closed at 11-month lows on Monday amid a global sell-off triggered by fears that a fresh 40-year peak in US inflation will prompt an already-hawkish Fed to hike pandemic-era interest rates more aggressively. A COVID-19 warning from Beijing also kept investors on the back foot globally.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a long negative candle on the daily chart, reflecting a downtrend in the market, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

The 50-scrip index is on the edge of crucial support at 15,650-15,700 levels, which raises hopes of a buy-on-dips opportunity, he said.

Fear index surges

There has been heightened fear among investors that central banks will be more aggressive in the coming months to combat inflation, which will in turn hurt economic growth and put margins under pressure, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.

"Fear and uncertainty are clearly visible on the VIX," he said.

The India VIX — also known in market parlance as the fear index — jumped 14.3 percent to settle at 22.4 on Monday, its biggest single-day jump in seven weeks.

Here are key things to know about the market ahead of the June 14 session:

SGX Nifty

Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — fell as much as 163.5 points or one percent to 15,615 early on Tuesday, suggesting a gap-down opening ahead on Dalal Street.

Global markets

Equities in other Asian markets tanked on Tuesday tracking overnight losses on Wall Street. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.9 percent at the last count.

Japan's Nikkei 225 was down two percent, China's Shanghai Composite 0.5 percent and Hong Kong's Hang Seng 0.8 percent.

S&P 500 futures rose 0.4 percent. On Monday, the S&P 500 confirming a bear market, as fears grew that the expected aggressive interest rate hikes by the Fed will push the world's largest economy into a recession.

What to expect on Dalal Street

Kotak Securities' Chouhan believes that a decisive move below 15,700 will be a major downside event for the market.

"In such a situation, the Nifty would fall to 15,500-15,400 in the short term. It is advisable to reduce a weak long position below 15,700 level. The Bank Nifty could drop to 32,000 if it ends below 33,500," he warned.

Important levels to track

The Nifty50 and the Nifty Bank are around nine percent below their long-term simple moving averages in a bearish signal.

FII/DII activity

Call/put open interest

The maximum call open interest is accumulated at the strike price of 16,500, with 1.8 lakh contracts, and the next highest at 16,300, with 1.3 lakh, according to exchange data. On the other hand, the maximum put open interest is at 15,000 and 15,500, with one lakh contracts each.

This suggests immediate resistance at 16,300 and immediate support at the 15,500 mark.

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

One stock on the BSE 500 — the broadest index on the bourse — bucked the trend on the Street to hit a 52-week high: Mahindra Lifespace Developers.

52-week lows

A total of 61 scrips hit 52-week lows. Among them were four Sensex scrips: the Bajaj twins, Tata Steel and UltraTech.

First Published:Jun 13, 2022 5:59 PM IST