Market expected to reverse down from higher levels; 5 key things to know before opening bell

Bulls are looking to make a comeback on Dalal Street as ahead of Wednesday’s trade, SGX Nifty was up in the green, hinting at a positive start for Indian equity markets

Stock markets
Ahead of Wednesday’s trade, SGX Nifty was up in the green, hinting at a positive start for Indian equity markets. (File Photo PTI)

Bulls are looking to make a comeback on Dalal Street as ahead of Wednesday’s trade, SGX Nifty was up in the green, hinting at a positive start for Indian equity markets. After a manic Monday, benchmark indices surged higher on Tuesday with S&P BSE Sensex ending at 56,319, up 497 points or 0.89% and NSE Nifty 50 zooming 156 points to settle at 16,770. “If market has to confirm its near term bottom, Nifty needs to surpass 17000 – 17200 with some authority. Till then we are not completely out of the woods. For the coming session, 16840 – 16966 remains to be a strong resistance zone; whereas on the lower side, 16680 followed by 16500 are to be seen as intraday supports, according to Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd.

Global cues

All three main indexes in US closed sharply higher on Tuesday, with strength in travel and tech shares as well as in Nike and Micron Technology following their earnings, as stocks rebounded from a coronavirus-fueled rout the session before. The Dow Jones Industrial Average rose 560.54 points, or 1.6%, to 35,492.7, the S&P 500 gained 81.21 points, or 1.78%, to 4,649.23 and the tech-heavy Nasdaq Composite added 360.14 points, or 2.4%, to 15,341.09. The benchmark S&P 500 has gained 23.8% so far in 2021.

Asian sharemarkets were gaining ground on Wednesday as the risk appetite of global investors rose, despite the surging number of Omicron variant cases around the world. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.6%. Australian shares were down 0.1% as a result of a higher US dollar overnight which weakened appetite for commodities and the sector’s related stocks, according to analysts. Japan’s Nikkei stock index was 0.1% higher. Hong Kong’s Hang Seng Index jumped 1.2% and China’s blue-chip CSI 300 Index was 0.23% up in eary trade.

Technical view

After showing a sharp weakness in the last couple of sessions, the Nifty witnessed a reasonable upside bounce on Tuesday and closed the day higher by 156 points amid high volatility. A small positive candle was formed on the daily chart with upper and lower shadow. Technically, this pattern indicate a formation of doji type candle pattern (not a classical one). This market action display weak upside bounce in the market. The negative chart pattern like lower tops and bottoms continued in Nifty as per daily timeframe chart and Tuesday’s upside bounce could be a part of new lower top formation, said Nagaraj Shetti, Technical Research  Analyst, HDFC Securities.

The market has witnessed sharp downward reversals from the higher resistances in the recent past. We expect the upper area of 17000-17100 levels to be a strong resistance in the short term. The negative trend set up in Nifty is still intact and Tuesday’s upside bounce has not changed the sentiment so far. There is a possibility of minor upside bounce towards 17000-17100 levels in the next few sessions and the market is expected to reverse down from the higher levels. Immediate support is placed at 16630 levels, he added.

Key resistance and support levels for Nifty

Nifty in its bounce has faced resistance from the down gap of 16966 (intra day high 16936). It corrected from above but still managed to end in the positive. This upward momentum could last a couple of days. Advance decline ratio ended in the positive. 16891-16966 remains a resistance band for the Nifty while 16688 is a support, said Deepak Jasani, Head of Retail Research, HDFC Securities

Stocks under F&O ban on NSE

Escorts, Indiabulls Housing Finance, and Zee Entertainment Enterprises are the three stocks under the F&O ban today (22 December). Securities in the ban period under the F&O segment include companies in which the security has crossed 95 percent of the market-wide position limit.

IPO Watch 

Metro Brands listing: Billionaire investor Rakesh Jhunjhunwala-backed Metro Brands’ shares will debut on the bourses on Tuesday (December 22). The stock will be listed on both national stock exchange as well as on Bombay stock exchange. The initial public offer (IPO) of the footwear retailer had received lower-than-expected subscription as it was subscribed 3.64 times from December 10-14.

Qualified institutional buyers’ portion was subscribed 8.49 times. Non-institutional investors had put in bids for 3.02 times the allotted quota, while the retail portion was subscribed 1.13 times. The company garnered Rs 1,367.5 crore through public issue of 2.73 crore equity shares at Rs 500 per share. The offer comprised of a fresh issue of Rs 295 crore, and an offer for sale of Rs 1,072.5 crore by the promoters.

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