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Indian equity benchmarks finished a volatile session in the red on Monday — a second straight day of fall — as losses in IT stocks offset gains in metal stocks and a fag-end rebound in select financial shares.

Caution persisted on the Street ahead of a key decision by the RBI due this week.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a small positive candle on the daily chart with minor upper and lower shadows, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

"Normally, such patterns following a reasonable moves call for a reversal on either side. But since this one comes amid rangebound moves, its predictive value could be less," he said.

A make-or-break level: 16,371

The 50-scrip index will lack direction for next two sessions as the key driver of sentiment hinges on the outcome of the RBI's monetary policy review on June 8, said Prashanth Tapse, Vice President (Research) at Mehta Equities.

"Technically, the downside risk on the Nifty is at 16,371, which is its make-or-break support. If it holds, one can expect the bulls to regroup with aggressive targets seen at 16,897-17,250 levels from an inter-week perspective," he said.

Here are key things to know about the market ahead of the June 7 session:

SGX Nifty

Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — fell as much as 145.5 points or 0.9 percent to 16,426.5 early on Tuesday, suggesting a gap-down opening ahead on Dalal Street.

Global markets

Equities in other Asian markets were a mixed bag on Tuesday following cautious gains on Wall Street, amid persistent concerns about inflation and aggressive hikes in COVID-era interest rates. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.7 percent at the last count.

Japan's Nikkei 225 was up 0.4 percent but China's Shanghai Composite down 0.3 percent and Hong Kong's Hang Seng down 0.4 percent.

S&P 500 futures were down half a percent. On Monday, the main US indices ended a choppy session higher, helped by gains in Amazon and other mega-cap growth shares. The S&P 500 rose 0.3 percent, the Dow Jones 0.1 percent and the Nasdaq composite 0.4 percent.

What to expect on Dalal Street

HDFC Securities' Shetti is of the view that a bounce is possible as long as the index defends the 16,400 zone.

"The Nifty has sustained above the lower range of 16,450. There is a possibility of it moving towards the upper range of 16,800 in the short-term," he said.

Important levels to track

Both the Nifty50 and the Nifty Bank are around four percent below their long-term simple moving averages.

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 17,200, with 1.5 lakh contracts, and the next highest at 17,000, with 1.4 lakh, according to exchange data. On the other hand, the maximum put open interest is at 16,300, with 1.1 lakh contracts, and then 16,500, with almost 95,000.

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

Two stocks on the BSE 500 — the broadest index on the bourse — touched the milestone: Oil India and Sumitomo Chemical.

52-week lows

A total of 19 scrips hit 52-week lows:

Fear gauge

The India VIX — known in market parlance as the fear index — rose 1.1 percent to settle at 20.2 on Monday.

First Published:Jun 6, 2022 6:02 PM IST