Nifty 50 may slide towards key support levels; Fomc and ECB tariff decisions this week

The Nifty and Sensex posted losses of more than 1% last week, dragged down mainly by tech names.

After two weeks of gains, India’s benchmarks have fallen 1% each over the past week, led mainly by tech names that are facing fresh selling pressure. The Nifty IT fell more than 6% last week.

33 of Nifty 50 voters ended the week with losses. PSU banks continued their outperformance, with the index ending with gains of almost 5% for the week.

Other outperformers last week included FMCG names like HUL, Nestle and Asian Paints, while Axis Bank and L&T rounded out the list. Yes Bank, Madras Fertilizers, Jindal Stainless and Bank of Baroda were among the top gainers in the broader markets.

In an interaction with CNBC-TV18 On Friday, Sunil Subramaniam of Sundaram Mutual Fund said many existing investors were taking profits as they worried about the clear direction of the market as the world headed into a recession. “So I think there’s a bit of healthy earnings booking, which I think is good because they’ll be working on the sidelines and probably waiting for the right time to re-enter,” he said.

What do the graphs suggest for Dalal Street?

Nagaraj Shetti, Technical Research Analyst at HDFC Securities expects more near-term weakness for the Nifty 50 as it formed a long negative candle on its daily chart with a minor lower shadow. “Technically, this pattern indicates a breakout downside of the range-bound movement of the past few sessions,” he said.

Kunal Shah of LKP Securities witnessed the build-up of short positions at higher levels for the Nifty Bank Index, which recently outperformed the Nifty 50. According to him, the index is trading in a wide range from 43,000 to 44,000, where a significant amount of sell and buy entries were observed respectively. “The index needs to decisively break through the range for a trend move either side,” he said.

Here are the key things to know about the market ahead of the December 12 session:

Clever SGX

On Monday, Singapore Stock Exchange (SGX) Nifty futures – a leading indicator of the Nifty index – fell 32 points or 0.17% to 18,559, indicating a flat to negative open for the market.

Global Markets

Benchmarks posted another day of losses on Wall Street, with the Dow Jones losing another 300 points, bringing the total weekly loss to 2.8%. It was the worst week for the index since September. The S&P 500 and Nasdaq fell 0.7% each. For the week, both indexes were down almost 4%.

The focus now shifts to the US Federal Reserve, which is expected to hike rates by 50 basis points at the end of its December meeting on Wednesday.

What to expect in Dalal Street

Siddhartha Khemka of Motilal Oswal Financial Services expects the market consolidation mode to continue until central banks like the Fed, ECB and Bank of England release their policies next week. He also expects weakness in tech stocks to continue, while consumer staples may fare well thanks to falling commodity prices and better demand.

Support for the Nifty in the coming week is between 18,550 and 18,380, according to Ruchit Jain of If the index breaks above the support range, it may see corrective price action towards 18,100. On the other hand, if support is held, it may lead to a pullback towards the 18,650 and 18,730 levels.

Main levels to monitor

For the weekly options expiry on December 15, the Nifty 50’s 18,800 strike call added 31.85 lakh shares in open interest, followed by the 18,700 call, which added 57.13 lakh and the 18,600 call which added 69.52 lakh.

On the downside, the 18,400 strike put added 17 lakh shares in Open Interest, followed by the 18,300 put and the 18,200 put, which added 14.6 lakh and 21 lakh shares in Open Interest respectively.

Among stocks, GNFC remains in the F&O ban while stocks like PNB, Delta Corp and BHEL are new entrants in the F&O ban. Indiabulls Housing Finance will emerge from the ban on today’s trading session.

FII/DII activity

REITs invested Rs 36,238 crore in Indian stocks for the month of November, according to NSDL Data. Large purchases were seen in financial services, capital goods, automobiles and auto components.

VK Vijayakumar, chief investment strategist at Geojit Financial Services, believes that while India will continue to attract financial capital, high valuations will act as a deterrent.

“Going forward, in the short term, REITs are likely to make only modest purchases in performing sectors and may continue to sell and take profits in sectors where they are sitting on big profits. More money is likely to move to cheaper markets,” he said. said.

Long build up

Here are five stocks that have seen an increase in open interest as well as price:

SharesCurrent IOCPMPrice changeChange of IO
Cummins India22,92,0001,512.253.31%35.85%
AU Small Financial Bank79,36,000679.001.21%7.77%
Gujarat Gas48,83,750521.200.08%4.21%
Nestle India2,77,64020,354.901.95%2.09%

Short accumulation (decrease in price and increase in open interest)

SharesCurrent IOCPMPrice changeChange of IO
HCL Technician1,13,91,8001,033.05-6.81%19.96%
Metropolis Health9,31,2001,425.00-0.97%6.92%
Honeywell Automation34,62041,820.00-0.36%5.82%
Havell India47,07,0001,191.00-2.53%5.42%

Short cover (increase in price and decrease in open interest)

SharesCurrent IOCPMPrice changeChange of IO
Bank of Baroda8,68,37,400189.800.74%-8.76%
Eicher engines31,65,2253,369.000.56%-5.54%

Long rollout (decline in price and open interest)

SharesCurrent IOCPMPrice changeChange of IO
Apollo tires1,34,78,500317.30-0.58%-7.20%
Navin Fluor4,35,6004,380.05-0.95%-6.07%
Financial Oracle5,50,8003,057.95-2.04%-5.62%


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