Dalal Street began the Samvat 2078 with a bang, with benchmark indices rising half a percent each in a special, one-hour Muhurat trading session on Diwali. Broad-based gains, led by automobile, oil & gas and select financial stocks, pushed the headline gauges higher.

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What do the charts suggest for Dalal Street now?

The short-term trend in the Nifty appears to be rangebound with a weak bias, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

"A sustainable move above 18050 levels is expected to open fresh buying enthusiasm in the market. Weakness below 17,750 could result in the Nifty revisiting important support at 17,600," he said.

Also Read | Sensex rises over 1% in Diwali week, makes a comeback after 2 weekly losses

Time to stay cautious

Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, remains cautious on the market. Here's why:

A lower top-lower bottom formation on the daily chart was confirmed last Friday

Nifty50 broke below 18,000 along with violation of key short-term moving average, which now acts as a sturdy wall

Monthly chart shows a shooting star pattern, which does not bode well for the bulls

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

SGX Nifty

At 8:10 am on Monday, Nifty futures trading on Singapore Exchange -- an early indicator of the Nifty50 index -- were up 65.5 points or 0.4 percent at 18,006, suggesting a positive start ahead on Dalal Street.

Global Markets

Asian shares gave up initial gains early on Monday as caution was warranted ahead of a reading on US inflation that could spook the rate horses. MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.2 percent. Japan’s Nikkei was down 0.1 percent.

S&P E-Mini futures were down 0.2 percent. On Friday, the three main Wall Street indices scaled record highs in a broad-based rally, after data showed strong jobs growth in the US in October.

What to expect on Dalal Street

Indications are in favour of further consolidation in the market, however, the range could broaden this week, according to Ajit Mishra, VP Research at Religare Broking.

"Nifty would find support around 17,750-17,600 levels, and in case of a rebound, resistance remains intact in the 18,000-18,100 zone. We are still seeing noticeable action on both sides, so participants should stay focused on stock selection and overnight risk management," he said.

Stock-specific movements are likely to continue in the market with the release of the last batch of Q2 earnings, according to Santosh Meena, Head of Research at Swastika Investmart.

Chavan of Angel One advises traders not to carry aggressive bets on the long side as long as the index stays below the 18,000-18,100 band on a closing basis. The coming week would be quite crucial, he said, as it may dictate the near-term direction.

"We may see this corrective move extend towards 17,450 first and if things worsen, the possibility of it sliding towards 17,200-17,000 levels cannot be ruled out," Chavan added.

Also Read | The Week Ahead: Macro data, IPO activity, FII flow likely to influence market

Key levels to watch out for

Nifty50: The near-term texture in the market looks weak, though the index appears to be respecting its 50-day moving average, according to Meena.

Critical resistance is expected at 18,000-18,200 levels. If the index manages to take out this zone, one may say that correction has ended for the time being. However, if the Nifty50 slips below 17,700, more weakness towards 17,450-17,250 levels can be expected, he said.

Bank Nifty: The banking index is trying to respect its 20-day moving average on a closing basis, and may see bullish momentum if it manages to sustain the critical supply zone of 41,000. Immediate support is expected at 39,000, which may be followed by sacrosanct support at 38,500, he said.

FII/DII activity

Foreign institutional investors (FIIs) remained bearish on Indian equities, net offloading shares worth Rs 328 crore Thursday. Net purchases by domestic institutional investors (DIIs) stood at Rs 38 crore, exchange data showed.

Call/put open interest

The maximum open interest remains at the strike price of 18,000 and the next highest at 18,300. The maximum put open interest is placed at the strike price of 17,500, NSE data shows. This suggests immediate resistance can be expected at 18,000, followed by 18,300, and support comes in at 17,500.

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

As many as 18 stocks in the BSE 500 index -- the broadest gauge on the bourse -- hit 52-week highs, including Larsen & Toubro, TVS Motor, Canara Bank, Inox Leisure, Lemon Tree, Relaxo and Sobha.

52-week lows

No stock in the index hit a 52-week low. Among the 11 other stocks to have hit the trough were Windlas Biotech and Generic Pharmasec.

Volatility gauge

NSE's India VIX index — which gauges the expectation of volatility in the near term — fell 2.3 percent to 15.8 Thursday. It held on to most of the intraday gains in the Muhurat session.

(Edited by : Yashi Gupta)

First Published:Nov 7, 2021 4:57 PM IST