On Tuesday morning, SGX Nifty was up 89 points, hinting at a positive start for the day’s trade on Dalal Street.
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After falling for two consecutive trading sessions, domestic equity markets may look to reverse the trend on Tuesday. S&P BSE Sensex currently sits at 48,564 points while the 50-stock NSE Nifty was at 14,281. On Tuesday morning, SGX Nifty was up 89 points, hinting at a positive start for the day’s trade on Dalal Street. Although Wall Street was closed on Monday for trading, cues from Asian peers were mixed. Shanghai Composite was down 0.25% but Hang Seng was up more than 1%. Nikkei 225 and TOPIX too were up with gains, followed by KOSPI and KOSDAQ.
What do the charts say: Nifty has carried on with a negative bias for two consecutive trading sessions now. The weakness took the index below the support levels of 14,350. “A long negative candle was formed on the daily chart with a minor lower shadow. Monday’s weakness has turned out to be a back to back decline in the market for the two consecutive sessions. This follow-through weakness pattern has been formed for first time on Monday, nearly after two months (as per daily chart). Hence, one needs to be cautious about crucial trend reversal in the market,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
Levels to watch out: Some technical analysts believe the trend might have reversed with the consecutive fall in the Nifty. “As the market closed below the crucial support 14350/48800, Nifty could fall to 14100/48100 or 14000/47900 in next couple of days. On the higher side, 14350/48800 and 14460/49150 would be major hurdles,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities. He advises to trade on bounces and keeping a stop-loss.
FII and DII activity: Despite the weakness, Foreign Institutional Investors (FII) have not stopped buying domestic securities. FIIs pumped in Rs 650 crore into domestic stock on Monday morning. They were also net buyers of Index Options and Stock Futures. Domestic Institutional Investors (DII) were again net sellers on Monday, pulling away Rs 42.51 crore.
Call and Put Option data: For the January series, maximum Call Open Interest (OI) is still placed at 15,000 strike with 24,93 lakh contracts. This is followed by 19.98 lakh contracts at 14,500 strike. However, massive Call writing was seen at 14,500 and 14,400 and Call unwinding was at levels higher than 15,000. Put OI is the most at 14,000 strike with 31.32 lakh contracts, followed by 13,000 strike with 24.28 lakh contracts.