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Trade setup for Dec 31: Is Nifty50 gearing up for higher levels? Check out market cues before last session of 2021

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Trade setup for Friday, December 31: The Nifty50 has formed a small candle on the daily chart with minor upper and lower shadows, says Nagaraj Shetti of HDFC Securities. Here's what the technical charts suggest for the last session of 2021 on Dalal Street.

Trade setup for Dec 31: Is Nifty50 gearing up for higher levels? Check out market cues before last session of 2021
Indian shares ended Thursday's trade flat on the day of monthly F&O expiry amid persisting volatility, as investors stayed cautious over the spreading Omicron variant of COVID-19. Gains in IT and financial stocks were offset by losses in oil & gas, auto and metal shares.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a small candle on the daily chart with minor upper and lower shadows, hinting at a doji type pattern, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
"Normally, such doji at the highs or lows could be considered an impending warning signal for a trend reversal. However, the predictive value of this pattern could be less in this case," he said.
Bulls eye 17,275 
For the bulls, 17,275 is an important breakout level to watch in the 50-scrip index, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
"If the Nifty50 manages to surpass that, we can expect a quick uptrend towards 17,325-17,375 levels. On the flipside, a move below 17,150 could trigger further weakness up to the 17,100-17,065 zone," he said.
Here are key things to know about the market before the last trading session of 2021:
SGX Nifty
At 7:46 am on Friday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty50 index -- were up 10.5 points or 0.1 percent at
17,305.5, having gained as much as 20 points earlier in the day.
Global markets
Equities in other Asian markets rose on Friday amid thin trade as several regions were closed for the New Year. MSCI's broadest index of Asia Pacific shares outside Japan was up 0.8 percent at the last count. China's Shanghai Composite was up 0.5 percent, Hong Kong's Hang Seng 1.9 percent, and Singapore's Straits Times 0.4 percent.
S&P 500 futures were down 0.1 percent in Asia. On Thursday, the three main Wall Street indices ended 0.2-0.3 percent lower.
What to expect on Dalal Street
HDFC Securities' Shetti believes the Nifty50 may remain choppy in the short term. "The lack of selling participation at crucial overhead resistance could give a chance for the bulls to make a sharp comeback from the lows in the near term. Hence, the said consolidation movement could continue for the short term, with immediate support at 17,120," he said. 
The Nifty50 is above the 20-day moving average with momentum indicator MACD giving a 'buy' signal, according to Manish Shah, an independent technical analyst. "The index needs to break past resistance in the 17,350-17,400 zone to continue its rally, and reach levels of 17,650-17,700," he said.
Key levels to watch out for
Nifty50: Immediate support for the index remains at 17,000 and immediate support at 17,400, according to Mohit Nigam, Head-PMS at Hem Securities. One can witness a 200-300-point rally in the Nifty50 from in the near term, he said.
Bank Nifty: For the banking index, Nigam sees immediate support at 34,500 and immediate resistance at 35,500.
FII/DII activity
Foreign institutional investors (FIIs) net sold Indian equities worth Rs 986.3 crore on Thursday. However, domestic institutional investors made net purchases of Rs 577.7 crore, according to provisional exchange data.
However, Indian equities are on track for a third straight month of FII outflows.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,500, with 1.4 lakh contracts, and the next highest at 17,300, with 1.1 lakh contracts, according to exchange data. There is a high degree of put open interest at 17,000, with 1.2 lakh contracts, and 16,700, with 1.1 lakh contracts, the data showed.
This suggests immediate resistance at 17,300 mark followed by a major hurdle at 17,500, and significant support only at Mount 17,000.
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:
SymbolCurrent OICMPPrice change (%)OI change (%)
CIPLA31,42,750951.751.49%51.62%
HDFC28,39,2002,579.100.44%48.85%
TECHM35,53,8001,805.050.85%47.61%
BERGEPAINT9,71,300760.050.93%45.87%
SBILIFE23,75,2501,1960.93%44.90%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
TVSMOTOR15,96,000614.85-1.35%-58.77%
STAR13,34,475444.5-1.28%-49.57%
GRANULES41,46,250338-1.02%-44.64%
INDIAMART54,1506,297.30-0.87%-44.60%
NATIONALUM1,88,19,00097.6-1.11%-39.52%
(Decrease in open interest as well as price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
BOSCHLTD33,90016,9001.13%-77.88%
ATUL9,4508,975.100.80%-76.19%
TORNTPOWER8,76,0005450.75%-62.16%
ASTRAL99,0002,286.950.22%-46.67%
POWERGRID57,43,641204.450.05%-41.88%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
SHREECEM43,70026,358-0.87%61.90%
INDIGO7,11,0001,971.35-1.73%59.92%
ULTRACEMCO3,37,0007,397.05-0.31%55.79%
BHARATFORG23,47,500694-1.03%46.45%
MUTHOOTFIN6,87,0001,478-1.24%46.29%
(Increase in open interest and decrease in price)
52-week highs
In the BSE 500 pack, Tech Mahindra, Persistent, KPIT, Birlasoft, Escorts, Suzlon, KIMS, Metropolis, Radico Khaitan and Anupa Rasayan were among the 15 stocks that hit 52-week highs.
52-week lows
Two stocks in the broadest index on the bourse hit 52-week lows: MAS Financial Services and RBL Bank.
Volatility gauge
NSE's India VIX index — which gauges the expectation of volatility in the market — jumped two percent to settle at 16.6 on Thursday, as investors rushed to settle their positions ahead of the F&O expiry. During the session, it spiked as much as 3.4 percent. 
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