Indian equity benchmarks moved further away from record highs registered last week tracking weakness across global markets on Monday. Investors the world over awaited cues from the Federal Reserve to better assess the roadmap for the pandemic-era stimulus and interest rates.

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A selloff across sectors barring the metal basket dragged the Nifty50 index lower. Banking and metal shares were the worst hit.

So, what do the charts suggest for Dalal Street?

The 50-scrip index formed a bearish continuation pattern, suggesting more downside to the crucial zone between 17,300 and 17,100, according to Shrikant Chouhan, Head - Equity Research (Retail) at Kotak Securities.

"The next support would be at the 20-day simple moving average placed at 17,150-17,200 levels. Our strategy should be to look for buying opportunities in strong companies between these levels," he said.

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Investors, time to focus on quality!

Investors are cautious ahead of the US and European central bank meetings due this week, said Siddhartha Khemka, Head-Retail Research at Motilal Oswal Financial Services.

"This along with worries over slower economic growth and rising cases of the Delta variant of Covid globally continue to keep the markets nervous. Even valuations are not at comfortable levels and could lead to bouts of profit booking. Traders should adopt a stock-specific approach and investors could tap this opportunity to accumulate quality stocks," he said.

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

SGX Nifty

At 8:13 am on Tuesday, Nifty futures trading on Singapore Exchange -- an early indicator of India's benchmark Nifty50 index -- were up 58.5 points or 0.3 percent at 17,432, suggesting a positive start ahead on Dalal Street.

Global markets

Equities in other Asian markets were caught in the grip of contagion fears sparked by troubles at China Evergrande amid growing risks the property giant could default on its massive debt. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, while Japan’s Nikkei 225 index was down two percent.

Overnight on Wall Street, the S&P 500 index plunged 1.7 percent -- its biggest drop in four months. The Nasdaq Golden Dragon China gauge of US-listed Chinese shares tanked 5.4 percent to near 15-month lows hit last month. S&P 500 E-Mini futures were up 0.3 percent, hinting at a rebound ahead in the US on Tuesday.

What to expect on Dalal Street

Monday's confirmation of a short-term top reversal pattern is likely to drag the Nifty index to 17,200-17,150 levels in the next few sessions, according to HDFC Securities' Shetti.

The index could find strong resistance at 17,625 on any attempt to bounce back, and a move below 17,150 will likely open more broad-based weakness in the near term, he said.

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Key levels to watch out for

Nifty50: Stiff hurdles can be expected at 17,550-17,630 levels and a a key support zone seen in the 17,450-17,250 band, according to Chavan.

"A violation of the lower range would lead to an extended correction in the market which is likely in the coming days. All eyes would be on the banking and midcap stocks, which are likely to set the tone for the other participants," he said.

Bank Nifty: An intraday barrier is seen at the 37,500 mark, and levels of 36,800-36,400 should be watched out for on the downside.

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FII/DII activity

Foreign institutional investors (FIIs) brought in a net Rs 92.5 crore into the Indian capital market on Monday. However, net sales by domestic institutional investors (DIIs) were as high as Rs 1,626.6 crore, exchange data showed.

Call/put open interest

There is a high degree of call open interest at the strike prices of 17,800 and 18,000 and 18,000. On the other hand, a large amount of put open interest is concentrated at the 17,000 mark, NSE data shows. This suggests that immediate resistance can be expected at 17,800, followed by 18,000, 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

ITC, HCL Tech, Tech Mahindra, ICICI Lombard General Insurance, Indian Hotels, Tata Elxsi and Mindtree were among the 25 stocks in the BSE 500 index — the broadest gauge on the stock exchange — that clocked 52-week highs. L&T Infotech, Westlife Development, Coforge, Dabur and DMart also hit the milestone.

52-week lows

No stock in the BSE 500 universe logged a 52-week low. Apart from that, CarTrade Tech, Krsnaa Diagnostics, PVP Ventures and Aashka Hospitals were among the 24 stocks that hit the trough on the bourse.

Volatility gauge

NSE's India VIX index -- which gauges the expectation of volatility in the market -- spiked 14.8 percent to 17.5 in its biggest single-day jump since June 14.

First Published:Sept 20, 2021 6:35 PM IST