It is not very often that you see the Nifty drop 500 points from the day’s high, but it is also not very often that you see the index rally close to 3,000 points within two months either. Therefore, Thursday’s correction witnessed by the benchmarks, without any apparent trigger, may not have surprised many market watchers in what would otherwise have set off alarm bells on the street.
Greater pain was felt in the broader markets. Only apt because they are also the outperformer this year. For stocks like IREDA, IRFC and the likes, which have risen 2x and 3x, a 6-7% correction in a day can only be termed standard profit booking.
Institutional participation saw foreign investors remain net sellers in the cash market. Although the domestic figures are strong and one may want to read it as though they bought the dip, one must keep in mind the six major block deals worth nearly ₹10,000 crore that took place on Wednesday, which could also skew the number.
Thursday will also mark the penultimate options expiry for 2023 for the Nifty 50 weekly contracts.
The Nifty has formed a bearish candle on the daily charts, indicating further weakness from current levels, said Shrikant Chouhan of Kotak Securities. Below levels of 21,225, the Nifty could retest levels of 21,000 – 20,930. However, he advises contra traders to take a long position near 20,930 levels on the Nifty with a strict 30-poits stop loss.
Om Mehra of SAMCO Securities observed the formation of a bearish engulfing candle on the Nifty’s daily chart. While the 21,000 level has a minor support, the critical support lies near the 20-Day Moving Average around 20,800.
Further downsides on the Nifty is possible in case it breaches the next immediate support of 21,087, according to Subhash Gangadharan of HDFC Securities. He expects the index to fall towards the next major supports of 21,026 – 20,769 in the coming sessions, while any pullback rally could see resistance at 21,325.
The Nifty Bank index corrected nearly 1,000 points from the day’s high but saw a smaller quantum of loss compared to the Nifty 50. However, the index continued to face resistance around the 48,000 mark for the fourth day in a row. Barring HDFC Bank, most of the index constituents ended the day with losses.
SAMCO’s Om Mehra witnessed the Nifty Bank’s RSI dropping from Tuesday’s levels of 75 to 67 on Wednesday, signaling a potential shift in trend. According to him, resistance for the Nifty Bank remains at 48,000, while a Fibonacci retracement support level is around levels of 46,350.
What Are The F&O Cues Indicating?
Nifty 50’s December futures shed 5.8% and 7.4 lakh shares in Open Interest on Wednesday. They are now trading at a premium of 66.9 points compared to 74.65 points earlier. On the other hand, Nifty Bank’s December futures shed 4.5% and 83,115 shares in Open Interest. Nifty 50’s Put-Call Ratio is now at 0.66 from 1.13 earlier.
Ashok Leyland and India Cements are in the F&O ban list from today’s session, while IRCTC and Zee Entertainment are out of the ban.
Manappuram Finance, SAIL, Balrampur Chini, NALCO, Indus Towers, Delta Corp, Piramal Enterprises and RBL bank continue to remain in the ban list.
Nifty 50 on the Call side for December 21 expiry:
For today’s weekly options expiry, the Nifty 50 call strikes between 21,200 and 21,600 have seen Open Interest addition, with the 21,300 strike seeing the maximum addition.
| Strike | OI Change | Premium |
| 21,300 | 75.27 Lakh Added | 16.5 |
| 21,200 | 73.44 Lakh Added | 42.3 |
| 21,600 | 61.72 Lakh Added | 3.45 |
| 21,400 | 58.75 Lakh Added | 7.2 |
Nifty 50 on the Put side for December 21 expiry:
On the downside, Wednesday’s correction resulted in Nifty 50’s put strikes between 21,200 and 21,400 see significant Open Interest shedding for today’s expiry.
| Strike | OI Change | Premium |
| 21,400 | 92.15 Lakh Shed | 250.15 |
| 21,300 | 45.69 Lakh Shed | 159.4 |
| 21,350 | 30.99 Lakh Shed | 198.55 |
| 21,200 | 25.9 Lakh Shed | 94.35 |
These stocks have added fresh short positions during Wednesday’s trading session, meaning a decrease in price but increase in Open Interest:
| Stock | Price Change | OI Change |
| Abbott India | -3.71% | 17.40% |
| HDFC AMC | -0.34% | 13.42% |
| UltraTech | -1.22% | 11.53% |
| Astral | -2.33% | 11.12% |
| Tech Mahindra | -3.25% | 8.07% |
These stocks saw unwinding of long positions on Wednesday, meaning a decrease in both price and Open Interest:
| Stock | Price Change | OI Change |
| Delta Corp | -4.85% | -10.36% |
| IRCTC | -7.85% | -10.03% |
| Dixon Tech | -1.78% | -7.67% |
| Coal India | -4.62% | -7.21% |
| Granules India | -6.49% | -6.90% |
These are the stocks to watch out for ahead of Thursday’s trading session:
What Are Global Cues Indicating?
Benchmark indices in the Asia-Pacific tracked Wall Street losses overnight ahead of the key US GDP numbers later today.
The Nikkei 225 declined 1.3%, while the Topix fell by 1.2%. South Korea’s Kospi is down 0.4%, while the Kosdaq is on course to snap a three-day losing streak.
Hang Seng’s futures are also pointing to a weak start to the trading day.
S&P 500 and the Nasdaq saw their worst single-day drop since September 26, declining 1.5% each, while the Dow Jones closed 1.3% lower.
First Published: Dec 20, 2023 8:59 PM IST
Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
