Trade setup for Jan 11: Can bulls keep Nifty50 above 18,000? Check out key market cues before Tuesday's session

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Indian equity benchmarks began the second trading week of 2022 on a strong note led by broad-based gains, led by buying interest in financial, auto, metal and consumer stocks.

The Nifty Bank jumped 1.6 percent on top of last week’s 6.4 surge — its best week since May 2021.

What do the charts suggest for Dalal Street now?

The Nifty50 has formed a long bull candle on the daily chart, with a lower degree of higher highs and higher lows, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. 

The index has gained momentum after taking out the resistance level of 17,950, he said.

Near-term correction not ruled out

One should not rule out a correction in the near term, said Ruchit Jain, Lead Research at 5paisa.com. “We do not expect any significant price correction as the undertone in both the Nifty and the Bank Nifty remains bullish. Traders should look at proper money management and adding positions on declines rather than chasing the price upmove,” he said.

Jain is of the view that any dips towards immediate supports at 17,800 and 17,650 should be considered buying opportunities.

Here are key things to know about the market before the January 11 session:

Global markets

European shares began the day on a weak note and were on course to extend losses for a third straight session. Surging inflation sparked worries of more rate hikes and rising COVID-19 cases added to economic uncertainty. The pan-European Stoxx 600 index was down 0.2 percent at the last count.

S&P 500 futures were flat, suggesting a muted start ahead on Wall Street.

What to expect on Dalal Street

HDFC Securities’ Shetti expects the Nifty50 to achieve levels of 18,200-18,350 in the next week, with immediate support at 17,870.

Some corrective declines can be expected as the Nifty approaches the resistance zone of 18,150-18,200, but long-term investors need not worry. That is the message from independent technical analyst Manish Shah.

“There could be some opportunities for players looking at reversion-to-mean trades. As of now, there are no signs of a corrective decline,” he said.

Shah believes the underlying trend in the market remains strong. “MACD and directional movement both are in a buy mode. RSI shows a trendline breakout and is still below overbought levels,” he said.

Key levels to watch out for

Nifty50: The 50-scrip index has support at 17,700 and resistance at 18,200, according to Sachin Gupta, AVP-Research at Choice Broking.
Bank Nifty: For the banking index, he sees support at 37,500 and resistance at 38,800.
FII/DII activity
Foreign institutional investors (FIIs) net purchased Indian equities worth Rs 496.3 crore on Friday. However, net sales by domestic institutional investors stood at Rs 115.7 crore, according to provisional exchange data.
December was the third straight month of FII outflows for Indian equities.
Call/put open interest

Exchange data shows the maximum call open interest is accumulated at the strike price of 18,500, with 85,000 contracts, and the next highest at 19,000,  with almost 84,700 contracts. Also, the maximum put open interest is at 17,500, with some 90,750 contracts, and the next highest at 17,800, with more than 86,800 contracts.

This suggests a major hurdle each at 18,500 and Mount 19,000, and immediate support at 17,800, followed by a major cushion at 17,500.

Long build-up
Here are five stocks that saw an increase in open interest as well as price, suggesting a build-up of long positions:

Symbol Current OI CMP Price change (%) OI change (%)
CHAMBLFERT 27,79,500 434.95 2.24% 22.29%
PVR 26,30,441 1,432.20 4.73% 18.74%
IDFC 5,12,20,000 64.45 5.14% 18.49%
INDIACEM 1,42,01,300 252.6 4.86% 16.44%
NBCC 2,68,68,000 51.3 1.48% 12.51%

Long unwinding

Symbol Current OI CMP Price change (%) OI change (%)
PAGEIND 85,110 43,775 -0.85% -1.94%
IDEA 80,70,30,000 14.85 -2.30% -0.74%
PIDILITIND 21,09,000 2,721.90 -0.23% -0.43%

(Decrease in open interest as well as price)

Short-covering

Symbol Current OI CMP Price change (%) OI change (%)
GMRINFRA 8,32,50,000 48.45 5.67% -5.89%
DELTACORP 1,99,50,200 281.85 1.33% -3.99%
TATAPOWER 11,42,77,500 232.9 1.02% -3.00%
RBLBANK 4,10,52,400 141.5 4.39% -2.69%
TVSMOTOR 76,02,000 646.85 1.36% -2.56%

(Increase in price and decrease in open interest)

Short build-up

Symbol Current OI CMP Price change (%) OI change (%)
IPCALAB 11,00,925 1,062.80 -3.52% 120.56%
COFORGE 7,62,700 5,464.95 -4.32% 22.26%
WIPRO 2,65,80,000 693.8 -2.59% 18.40%
LTTS 6,61,600 5,631.90 -2.82% 16.44%
RAIN 36,00,000 241.9 -1.55% 12.64%

(Increase in open interest and decrease in price)

52-week highs

In the BSE 500 pack, Asian Paints, Pidilite, Birlasoft, India Cements, KPIT Tech, SRF, Poonawalla Fincorp, Kajaria Ceramics and Sunteck Realty were among the 16 stocks that hit 52-week highs.

52-week lows

One stock in the broadest index on the bourse hit a 52-week low: MAS Financial Services.

Volatility gauge

NSE’s India VIX index — which gauges the expectation of volatility — ended with a gain of 0.4 percent at 17.7 on Monday, having jumped as much as 4.5 percent during the session.