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The worst one-day decline in two months points to more weakness for the Nifty 50 | Jobs Vox

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The immediate support levels for the Nifti 50 are now at 18,350, below which the index may fall to 18,150.

India’s benchmark Nifti 50 could remain under pressure on the last trading day of the week after witnessing its worst one-day decline since October. Declines in the weekly options expiration session took the Nifty 50 below key support levels and the charts are now pointing to the downside.

Technology names continued to lead losses on Thursday, with Tech Mahindra, Infosys and TCS among the top 10 losers on the Nifta 50. 44 of the 50 constituents of the index ended with losses on Thursday.

Stocks like Britain managed to break the trend, even ending at a 52-week high.

In interaction with CNBC-TV18 on Thursday, Jyotivardhan Jaipuria of Valentis Advisors said several conditions will challenge the market heading into the new year. On the one hand, he expects inflation to moderate, thus slowing the pace of Fed rate hikes, but on the other hand, recessionary conditions may begin to increase, threatening earnings.

“I think you’re going to see zero to maybe slightly negative earnings growth next year,” he said.

What do the graphs suggest for Dalal Street?

According to Nagaraj Shetty, technical research analyst at HDFC Securities, a long candle formed on the Nifti 50 daily chart on Thursday after a small bounce over the last few sessions. “This pattern indicates a sharp reversal to the downside in the market following the formation of Wednesday’s lower top at the 18,696 level,” he said. “This is not a good sign and points to more weakness in the short term.”

A sharp fall in the Nifti Bank index after a two-month rally has turned it into an upside selling candidate, says Kunal Shah of LKP Securities, who believes the index will need to break the 44,000 level at the close to continue its uptrend. The Nifty Bank index fell by nearly 600 points on Thursday.

Here are the key things to know about the market ahead of the December 16 session:

On Friday, Nifty futures on the Singapore Stock Exchange (SGKS) — an early indicator of the Nifty index — fell 101 points, or 0.55 percent, to 18,358.5, indicating a bearish opening.

Asian markets opened lower following Wall Street’s lead as recession fears grow. The Nikkei 225 index is trading 1.4 percent lower, while the Topik index lost 0.85 percent. South Korea’s Kospi is also trading with losses of 0.7 percent.

Wall Street also sold off sharply on Thursday after retail sales data showed the Fed’s interest rate hike was pushing the economy into recession. The Dow Jones’ drop of 750 points was its worst day in three months. The S&P 500 fell 2.5 percent and the Nasdaq fell 3.2 percent, extending its losses for the year to 31 percent.

What to expect in Dalal Street

Credit Suisse’s Neelkanth Mishra expects FY24 earnings per share to be 12-15 percent higher and while India’s risk premium to global price and earnings has corrected, it is unlikely to return to previous levels. Among sector bets, he singled out banks, cement and construction as ones to be with, adding that IT and metal companies could come under some pressure.

HDFC Securities’ Shetty sees current support for the Nifty 50 index at 18,350 levels, and a move below this could take the index to the next support zone of 18,150 or 18,100 in the short-term. On the downside, the 18,550 levels have now become resistance for the Nifty 50.

In case the subsequent selling continues in the Bank Nifty, it could drag the index down to the 43,000 or 42,800 levels, according to LKP’s Shah.

Key levels to watch out for

For weekly options ending December 22, 18,600 call strike Nifti 50 added 52.8 lakh shares to Open Interest, followed by 18,500 call and 18,700 call which added 38.2 lakh and 25.8 lakh shares respectively.

On the downside, a strike of 18,400 times added 14.5 lakh shares to Open Interest along with 18,200 times (14.3 lakh shares) and 18,300 times (7.98 lakh shares).

FII/DII activity

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

Actions Current OI CMP Price change OI Change
Federal Bank 7,05,75,000 138.45 0.95% 2.00%
Gujarat Gas 46,25,000 528.50 0.25% 1.43%
Coromandel International 29,89,000 966.60 0.64% 1.33%
Bosch 1,28,850 17,620.00 0.21% 1.26%

Short Accumulation (Decreasing price and increasing open interest)

Actions Current OI CMP Price change OI Change
Metropolis Healthcare 15,30,000 1,323.90 -3.95% 21.54%
IRCTC 1,73,29,375 688.85 -6.42% 16.52%
SRF 44,92,500 2,395.00 -0.60% 13.06%
Tech Mahindra 1,23,66,000 1,029.00 -3.80% 10.24%
Canara Bank 4,59,21,600 320.75 -2.64% 8.18%

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

Actions Current OI CMP Price change OI Change
Indiabulls Housing Finance 3,71,44,000 149.50 2.43% -8.08%
RBL Bank 3,81,85,000 169.20 0.48% -7.12%
Accompanying Kubota 9,94,125 2,215.70 0.18% -6.35%
HPCL 2,14,08,300 246.45 0.88% -5.66%
GAIL 5,57,05,200 97.55 0.83% -5.51%

Long unwinding (price reduction and open interest)

Actions Current OI CMP Price change OI Change
Chambal Fertilizers 78,49,500 314.50 -0.14% -9.39%
Bharat Forge 60,52,000 896.65 -1.72% -7.98%
police officer 9,86,100 2,982.00 -0.72% -7.72%
ONGC 3,23,66,950 147.60 -0.44% -7.21%
Ramco Cement 31,73,900 720.00 -0.96% -7.07%

First published: IST

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