Indian equity benchmarks managed to halt a three-day losing streak on Thursday but lost steam in the final hours of a session that began on a strong note amid positive global cues.

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NSE

Both headline indices finished barely in the green, a day after the RBI spooked the bulls by announcing its first hike in the repo rate since August 2018 in an out-of-cycle move along with a raise in the cash reserve ratio.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a long negative candle on the daily chart following the previous day's huge long bear candle, in a sign of lack of strength to sustain the highs, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

However, it also signals a halt in sharp follow-through weakness after a sharp downside breakout of 16,800.

Nifty not out of the woods

The 50-scrip index is giving signs of further correction, warned Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.

"As long as it is below 16,850, the correction wave is likely to continue to 16,600-16,500 levels. On the flipside, 16,800 and 16,850 would act as immediate hurdles, beyond which, it can even hit 16,850," he said.

Here are key things to know about the market before the May 6 session:

SGX Nifty

At 7:36 am on Friday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty index -- were down 256.5 points or 1.5 percent at 16,434.5, suggesting a gap-down start ahead on Dalal Street.

Global markets

Equities in other Asian markets began the day deep in the red after a 425-basis point lift in Bank of England's inflation forecast for 2022 as it raised key rates to their highest since 2009 rattled Wall Street.

MSCI's broadest index of Asia Pacific shares outside Japan was down two percent in early hours.

Japan's Nikkei 225 was down 0.1 percent, China's Shanghai Composite 1.5 percent, Hong Kong's Hang Seng 2.5 percent, Singapore's Straits Times 1.3 percent and South Korea's Kospi 1.5 percent.

S&P 500 futures were down 0.4 percent. On Thursday, the three main US indices tumbled amid concerns that the Fed's recent rate hike may not be enough to tame surging inflation. The S&P 500 plunged 3.6 percent, the Dow Jones 3.1 percent and the technology stocks-heavy Nasdaq Composite five percent.

What to expect on Dalal Street

HDFC Securities' Shetti believes the Nifty's short-term trend remains negative. He expects a slide below 16,600 to open the next low of 16,200 in the near term.

"Any attempt of an upside rally could find strong resistance around 16,800-17,000 levels," he said.

Key levels to watch out for

The index remains more than 550 points below its long-term simple moving average.

FII/DII activity

Foreign institutional investors (FII) net sold Indian shares worth Rs 2,074.7 crore on Thursday, according to provisional exchange data. On the other hand, domestic institutional investors (DIIs) net bought shares worth Rs 2,229.3 crore.

Call/put open interest

On the call side, the highest open interest is at the strike price of 17,000, followed by 16,900, and on the put side, the highest open interest is at 16,500, followed by 16,400, according to Sumeet Bagadia, Executive Director at Choice Broking.

The Bank Nifty has support at 34,500 and resistance at 36,200, he said.

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 bourse's broadest index -- hit 52-week highs: PowerGrid and ESAB India.

52-week lows

A total of 11 scrips hit 52-week lows.

Fear index

The India VIX -- also known as the fear index -- dropped 7.2 percent to settle at 20.3 on Thursday.

First Published:May 5, 2022 8:11 PM IST