Indian equity benchmarks extended losses to a third straight day on Friday, dragged by selling pressure in financial, IT, and energy shares. The Nifty50 index is now 5 percent off a record high clocked on October 19. The banking index has retreated 4.5 percent from its peak (October 25).

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What do the charts suggest for Dalal Street now?

The Nifty50 index has formed a long bearish candle, clearly suggesting continuation of weakness in the near future, according to Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.

"The short-term trend remains weak due to the oversold situation in the market. The weekly trading setup suggests 17,800 would be the immediate hurdle for Nifty," he said.

Brace for some more pain

Nifty50 appears to be in the last stage of the current leg of decline, with its short-term range shifted lower, said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.

"The hourly momentum indicator is in an oversold zone and looking for a recovery. The current selling pressure is likely to get absorbed near 17,600," he said.

Here are key things to know about the market before Monday's session:

SGX Nifty

At 7:39 am on Monday, Nifty futures trading on Singapore Exchange -- an early indicator of the Nifty50 index -- were up 33.5 points or 0.2 percent at 17,783.5, suggesting a positive start ahead on Dalal Street.

Global Markets

Equities in other Asian markets began the week on a weak note, with MSCI's broadest index of Asia Pacific shares outside Japan down half a percent in early deals. S&P 500 futures were up 0.3 percent in early Asian trade, suggesting a positive opening ahead in the US.

On Friday, Wall Street ended a choppy session higher, after Apple and Amazon financial results reignited concerns of labour and supply shortages that have been at the forefront of the earnings season. The three main US indices rose 0.2-0.3 percent each.

What to expect on Dalal Street

The market is expected to remain bearish in the short term due to profit booking across various sectors and weak global clues, said Rahul Sharma, Co-Founder of Equity99. The market is getting mixed responses from investors on the ongoing earnings season, he said.

The finance sector will be in focus with HDFC set to declare its numbers. Also, the ongoing wild swings in IRCTC will continue as the company declares its numbers this week. Telecom and PSU banking shares will also be in the spotlight, he said.

Ratnaparkhi expects the Nifty50 index to move within a range of 17,600-18,000 in the short term.

Key levels to watch out for

Nifty50: If the index trades above 17,800, a pullback rally can be expected to 17,920-18,000-18,070 levels, according to Chouhan, On the other hand, below 17,800, the correction wave may continue up to 17,600-17,500-17,420 levels, he said.

Bank Nifty: The banking index is trading near the 20-day simple moving average and has maintained a strong formation on the daily chart. Key support for the Bank Nifty is placed at at 38,400 and 38,000, and may rise to higher levels if it takes out 38,400 on the upside, Chouhan added.

FII/DII activity

Foreign institutional investors (FIIs) remain bearish on Indian equities. On Friday, they withdrew a net Rs 5,142.6 crore from Indian shares. Domestic institutional investors (DIIs), however, made net purchases of Rs 4,342.5 crore, exchange data showed.

Call/put open interest

The maximum open interest is accumulated at the strike price of 18,000, and the next highest only at 18,500. The strike prices of 17,500 and 17,000 have the maximum put interest, NSE data shows. This suggests immediate support can be expected at 17,500 and resistance at 18,000.

Long build-up

Here are five stocks that saw an increase in open interest as well as price, suggesting a build-up of long positions:

Long unwinding

(Decrease in open interest and price)

Short-covering

(Decrease in open interest and increase in price)

Short build-up

(Increase in open interest and decrease in price)

52-week highs

TVS Motor, Escorts, Canara Bank, Cholamandalam Investment, ABB, Birla Corporation, Minda and Chalet Hotels were among the 11 BSE 500 stocks that hit 52-week highs.

52-week lows

Six stocks in the 500-strong barometer hit 52-week lows: Strides Pharma Science, Astrazeneca, Aarti Drugs, Johnson Controls-Hitachi Air, Indostar Capital and Bombay Burmah Trading.

Volatility gauge

NSE's India VIX index — which gauges the expectation of volatility in the near term — eased 2.7 percent to settle at 17.4 on Friday, reversing direction after surging as much as 9.7 percent during the session.

First Published:Oct 31, 2021 4:26 PM IST