Indian equity benchmarks extended gains to the sixth session in a row on Monday as the market resumed trade following a day's holiday. Strong buying interest in financial, IT and metal shares pushed the headline indices higher, taking them to unprecedented levels once again. Fear gauge VIX surged nine percent -- its biggest jump in nearly a month.

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What do the charts suggest for Dalal Street now?

The Nifty50 index has formed a small negative candle at the swing highs with minor upper and lower shadows, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. This pattern signals the formation of a spinning top type candle, which is often associated with a top reversal, he said, suggesting traders to protect long positions with apt stop losses.

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18,350 level key

Though the index formed a small bearish candle, it has been making higher lows for the past four sessions, said Chandan Taparia, Vice President-Equity Derivatives and Technical, Broking and Distribution at Motilal Oswal Financial Services. "Now it has to continue to hold above the 18,350 zone to extend its move towards 18,543 and 18,700 levels, with support seen at 18,250 and 18,150," he said.

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

SGX Nifty

At 8:08 am on Tuesday, Nifty futures trading on Singapore Exchange -- an early indicator of the Nifty50 index -- were up 82 points or 0.4 percent at 18,568, suggesting a positive opening ahead on Dalal Street.

Global Markets

Equities in other Asian markets rose on Tuesday tracking overnight gains on Wall Street, with MSCI's broadest index of Asia Pacific shares outside Japan last up 0.9 percent. Japan's Nikkei 225 benchmark was up 0.7 percent. Chinese blue chips reversed early losses to rise 0.5 percent, after falling 1.1 percent the previous day following the release of data that showed the country's GDP growth slowed in Q3.

S&P 500 E-Mini futures were last seen trading flat. On Monday, two of the three main US indices rose 0.3-0.8 percent led by tech stocks, but the Dow Jones Industrial Average declined 0.1 percent.

What to expect on Dalal Street

HDFC Securities' Shetti believes the short-term trend of the 50-scrip index remains positive. The overall chart pattern calls for caution when it comes to long positions with the possibility of another round of short-term weakness, which could be a buy-on-dips opportunity. "A sustainable move above 18,650 is likely to nullify this negative indication. Immediate support is placed at 18,350," he said.

The market is entering a bullish mode, but that is nothing new since March 2020, according to Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.

He suggests trading or investing in select stocks with decent potential; for instance, Infosys. Buying on the index is recommended only on large support, and selling advised on every negative reversal in the short term. "It will control the risk of large losses," he said.

Key levels to watch out for

Chouhan advises going long on the Nifty50 index around 18,370-18,400 levels with a stop loss at 18,250. Resistance is expected at 18,550, a level above which the chances of the gauge hitting 18,650 would be bright, he said.

FII/DII activity

Foreign institutional investors (FIIs) net purchased Indian equities worth Rs 512.44 crore on Monday. Domestic institutional investors (DIIs) played spoilsport, as their net sales stood at Rs 1,703.9 crore, exchange data showed.

Call/put open interest

The maximum call open interest is at the strike price of 19,000, and there is a high degree of accumulation at 18,600 and 18,900. On the other hand, the maximum put open interest is at 18,300, and next at 18,200, NSE data shows. This suggests immediate resistance can be expected at 18,600, and immediate support comes in at 18,300.

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

Infosys, HDFC Bank, Reliance Industries, Sun Pharma, Titan, Vedanta, ICICI Bank, IDBI Bank, Tata Power, Canara Bank, IndusInd Bank, Bajaj Finance, Bajaj Finserv, Indian Oil, PNB and ITC were among the 74 stocks in the BSE 500 universe that clocked 52-week highs. DMart, Dixon, Cyient, IRCTC, DLF, CESC, Aarti, EID Parry, Grasim, NTPC, Voltas, Nalco, Can Fin Homes and Bata were also among them.

52-week lows

While no stock in the broadest index on the bourse hit a 52-week low, Glenmark Life Sciences was among the 30 other scrips that hit the trough.

Volatility gauge

NSE's India VIX index — which gauges the expectation of volatility in the near term — ended nine percent higher at 17.2 on Monday -- its biggest single-day jump since September 20.

(Edited by : Abhishek Jha)

First Published:Oct 18, 2021 6:33 PM IST