Indian equity benchmarks finally hit a speed bump on Wednesday, with the 50-scrip Nifty50 benchmark halting a winning streak that stretched to seven trading sessions. Profit booking in IT and metal stocks put a sudden end to two-back-to-back record closing highs for the index.

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So, what do the charts suggest for Dalal Street?

The index formed a reasonable negative candle at the new highs, hinting at consolidation or minor weakness in the market, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

"Having moved up sharply recently, the current consolidation/weakness could be considered a buying opportunity. There is a higher possibility of an upside recovery attempt from the lows in the short term," he said.

Shetti, however, maintained that the short-term uptrend remains intact.

17,150 a crucial safety net?

"Based on the intraday chart, a close below 17,150 would invite further weakness in the short term, and the possibility of the index hitting 16,980-16,950 levels in such a situation is bright," said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

One should avoid taking any long bets unless Nifty50 crosses the 17,150, he suggested.

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

SGX Nifty

At 8:08 am on Thursday, Nifty futures trading on Singapore Exchange -- an early indicator of India's Nifty50 benchmark index -- were up 26.5 points or 0.15 percent at 17,126, hinting at a positive start ahead on Dalal Street.

Global markets

Asian shares moved higher shrugging off data this week that showed Asian and European factory activity lost momentum last month as the pandemic disrupted supply chains. MSCI's broadest index of Asia Pacific shares outside Japan was last seen trading 0.42 percent higher on Thursday morning.

Investors around the globe awaited US jobs data due on Friday to be able to better assess the timing of tapering of the central bank's stimulus. Overnight on Wall Street, the three key indices rose with the tech stocks-heavy Nasdaq Composite gauge hitting a record high. S&P 500 E-Mini futures were up 0.03 percent on Thursday, indicating a flat start ahead in the US.

What to expect on Dalal Street

"Although the recent momentum has been extremely strong, we can see some extreme levels in the index... If we take a broader view, we can see Nifty reaching the 200 percent Fibonacci retracement of last year’s massive decline from the January high to the March low. This level needs to be given some respect and, hence, some sort of a short-term pause around it cannot be ruled out," said Sameet Chavan, Chief Analyst — Technical and Derivatives at Angel Broking.

However, there is no clear trend reversal and one needs to keep a close eye on overall developments for a week or so, said Chavan, advising traders to keep booking profits to be on the safer side and avoid making aggressive long bets for a while.

The market might consolidate for some days now after showing such a huge rally in a short period of time, according to Rahul Sharma, Co-Founder of Equity99.

He expects banking, auto, metal and power spaces to be in focus on Thursday.

Key levels to watch out for

Nifty50: On Thursday, the weekly expiry day, the level of 17,200 is expected to act as resistance, and strong support is seen at 17,000, according to Chavan.

HDFC Securities' Shetti sees important support for the index at 16,950.

Nifty Bank: The banking index finds immediate support at 36,500, followed by 36,375-36,200 levels, and meets resistance in the 36,800-37,000 zone, according to Sharma.

ALSO READ | Can you bank on Bank Nifty now?

On Thursday, one needs to keep a close eye on the banking index's movements, according to Chouhan, who believes the September 2 session may be more beneficial for Bank Nifty traders.

FII/DII activity

Foreign institutional investors pumped a net Rs 666.66 crore into the Indian capital market on Wednesday, but domestic institutional investors withdrew a net Rs 1,287.87 crore from it, exchange data showed.

Call/put open interest

The maximum call open interest is accumulated at the strike price of 17,200, and next at 17,300. On the other hand, the maximum put open interest is at the strike price of 17,000, NSE data shows. This indicates that resistance can be expected at 17,200, and then 17,300, and support comes in at 17,000.

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)

Stocks hitting 52-week highs

Bharti Airtel, Adani Transmission, Asian Paints, Axis Bank, Bajaj Finserv, Bajaj Finance, Dabur, Havells, Deepak Nitrite, Godrej Consumer Products, Divi's Labs, Century Textiles, Brigade, Abbott India, Bajaj Electricals, Bajaj Holdings and Apollo Hospitals were among the stocks that clocked 52-week highs.

Stocks hitting 52-week lows

Not a single stock in the BSE 500 universe — the broadest index on the bourse — hit a 52-week low, though outside the 500-strong club, Pil Italica Lifestyle, PVP Ventures, Premier Capital and Greencrest Financial were among the few stocks that hit 52-week lows.

Volatility gauge

The India VIX index — which measures the expectation of volatility in the market — eased 2.30 percent to 14.19 on Wednesday, having jumped as high as 7.64 percent to 15.63 during the session.

(Edited by : Ajay Vaishnav)

First Published:Sept 1, 2021 6:23 PM IST