Bears revisited Dalal Street on Tuesday forcing benchmark indices to close deep in the negative territory. S&P BSE Sensex shed 709 points or 1.26% to close at 55,776 while the NSE Nifty 50 index tanked 208 points or 1.23% to settle at 16,663. Broader markets had mirrored the fall. Volatility was moving higher once again as the India VIX index breached 26 levels. However, entering Wednesday’s trade bulls seem to be back in action as SGX Nifty soared more than 200 points. Global cues were also favouring a positive momentum.
Global watch: On Wall Street the NASDAQ was up 2.92% on Tuesday, followed by the S&P 500 and the Dow Jones index. Asian markets were mirroring the up-move. Equity indices were buoyant as crude oil prices fell just ahead of the US Federal Reserve’s meeting.
Technical take: Although the bullish momentum for the short term might still be intact, the Nifty 50 has formed a bearish candle which indicates strong possibility of temporary weakness, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities. Meanwhile, Nagaraj Shetti, Technical Research Analyst at HDFC Securities said that Nifty’s chart indicates a formation of bearish dark cloud cover type formation at highs. “Normally, formation of such dark cloud cover patterns after a reasonable upmove or at the hurdle more often results in reversal pattern post-confirmation. Hence, one may expect further weakness in the coming session,” he added.
Levels to watch out: Nifty now needs to hold the levels of 16500-16400, according to Shrikant Chouhan, for the uptrend to be intact. “On the higher side, the immediate hurdle would be 16900-16950. On the downside, any fall below 16400 may increase further weakness up to 16350-16300,” he added while cautioning investors about high volatility. Nagaraj Shetti expects bottom formation around 16400-16250 levels in the next few sessions, before showing another round of upmove.
FII and DII trades: Foreign Institutional Investors (FII) continued their exodus from Dalal Street on Tuesday, pulling out Rs 1,249 crore. Domestic Institutional Investors (DII) were net buyers again but pushed in just Rs 98 crore.
Call and Put OI: Maximum Call Open Interest (OI) for the March series is placed at 18,000 strike with 24.2 lakh contracts. This is followed by 17,000 contracts. Put OI is the most at 16,000 strike with 45.3 lakh contracts, followed by 16,500 contracts.
