As Nifty retreats 2% from peak, is volatility here to stay? Main market indices ahead of Monday’s session

Indian stock indexes extended losses until the fourth straight session on Friday, led by IT and some financial stocks. Gains in metals and pharmaceuticals counters and a positive trend in broader markets kept investors bullish. The Nifty50 index is more than 2% of its all-time high of 17,947.7, recorded on September 24.

All eyes are now on the RBI’s bi-monthly policy review scheduled for this week.

So what do the charts suggest for Dalal Street?

The index of 50 scripts has formed a bearish candle on the weekly chart and a doji candle on the daily period, suggesting indecision in the market, according to Rohit Sigre, Senior Technical Analyst at LKP Securities. He expects an overall range for Nifty50 to be between 17,300 and 18,000.

“If Nifty50 manages to maintain support near the 17,450-17,400 area, a decent pullback can be expected towards the immediate and strong obstacle at 17,620-17.740,” he said.

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Prepare for volatility, again

Sameet Chavan, chief technical and derivatives analyst at Angel One, expects a limited rise in Nifty50 this week. “Volatility should stay on the rise … We are seeing good stock specific action; we can continue to follow it but try to make timely profits,” he advised.

Here are the key things to know about the market ahead of Monday’s session:

Global markets

Wall Street closed a volatile session on Friday stronger, with two of the three major US indices up more than one percent each. The Nasdaq Composite gauge, rich in tech stocks, rose 0.8%. A surge in Merck shares – the best boost in the Dow Jones Industrial Average – led by the the drugmaker’s progress in developing an oral COVID-19 drug has helped Investors Relax has helped investors distract themselves from worries about the US debt ceiling.

Earlier today, European stocks hit a two-month low amid economic headwinds in the form of supply chain constraints and high prices. Pan-European STOXX 600 index fell 0.4%.

What to expect on Dalal Street

“After a very long time, the Nifty Index left a breaking gap on the daily chart between 17,585 and 17,557 which would be immediate resistance for the market. The market would follow the 17,450-17,600 trading range. “said Shrikant Chouhan, Head-Equity Research (Retail) at Kotak Securities.

Key levels to watch

clever50: The 50-script index is facing strong resistance at the 17 800-17 950 levels with key support in the 17 450-17 300 band, and the first sign of weakness would only be visible after breaking this lower range , said Chavan.

Smart bank: The banking index should meet immediate resistance at levels 37,500-38,000 and find crucial support at 36,800 and 36,500, he said.

FII / DII activity

Foreign Institutional Investors (FII) contributed a net crore of Rs 131.4 in Indian equities. On the other hand, net sales of domestic institutional investors (DII) amounted to Rs 613.1 crore, according to stock exchange data.

Open interest call / put

There is a high degree of open call interest at the strike prices of 17,700 and 18,000. On the other hand, the maximum open interest is 17,400, and there is a strong accumulation at 17. 500, according to data from NSE. This suggests immediate resistance at 17,700 and support at 17,500, followed by 17,400.

Long accumulation

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

symbol Current OI CMP Price change (%) Change of IO (%)
TRENT 13.62.275 1,041 1.10% 20.17%
TVSMOTOR 52.33,200 570.55 3.30% 19.82%
BATAINDIA 17,36,350 1,849 3.67% 14.82%
PAGEIND 81,090 32,400 1.55% 11.99%
SUNTV 1,08,69,000 524.1 2.78% 11.72%

Long process

symbol Current OI CMP Price change (%) Change of IO (%)
GODREJPROP 22 97 100 2230.10 -3.31% -6.96%
TORNTPHARM 7.24.250 3,078.50 -0.44% -6.87%
DEPTH 24,50,500 2 384.65 -1.05% -6.18%
VOLTAS 28,49,500 1 219 -0.51% -6.09%
ASHOKLEY 5,36,89,500 130.7 -2.86% -5.26%

(Decrease in open interest and price)

Short cover

symbol Current OI CMP Price change (%) Change of IO (%)
INDUSTRY TOUR 1,19,70,000 315.9 2.88% -12.14%
CGSB 5,55,09,300 146.35 1.04% -8.24%
MFSL 25,50,600 1,017.50 0.06% -6.40%
AARTIIND 27.33.600 946.1 1.51% -6.06%
M & MFIN 2,44,56,000 186.1 0.22% -5.15%

(Decrease in open interest and increase in price)

Short construction

symbol Current OI CMP Price change (%) Change of IO (%)
CUMMINSIND 17 10 600 918.5 -7.95% 26.24%
CANFIN HOME 42.33.450 674.9 -2.11% 11.75%
ZEEL 4,60,56,000 296 -2.71% 8.02%
BAJAJFINSV 7 14 675 17,286.25 -3.11% 7.37%
INFY 3,29,64,600 1,651.70 -0.89% 7.27%

(Increase in open interest and decrease in price)

52 week highs

Indian Oil, ONGC, NTPC, Tata Power, Tata Investment, Canara Bank, Dixon Tech, Godfrey Philips, Aditya Birla Fashion, Allcargo and Bata were among the 26 BSE 500 stocks with 52 week highs.

52 week trough

No stock in the strong 500 index hit a 52-week low. Among the other 23 scrips that hit bottom were Aptus Value Housing Finance, Krsnaa Diagnostics and Sansera Engineering.

Volatility gauge

NSE’s India VIX Index – which measures short-term volatility expectations – fell 6.5% to 17.2 on Friday, after hovering between 17 and 19.1 levels during the choppy session.

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