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Trade setup for Dec 16: Can bulls rescue Nifty50? Check out key market cues ahead of Thursday's session

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Trade setup for Thursday, December 16: The Nifty50 has formed a reasonable negative candle on the daily chart, hinting at more weakness or consolidation, says Nagaraj Shetti of HDFC Securities. Here's what the technical charts suggest for the coming session on Dalal Street.

Trade setup for Dec 16: Can bulls rescue Nifty50? Check out key market cues ahead of Thursday's session
Indian equity benchmarks extended losses to the fourth session in a row on Wednesday, ahead of the outcome of the Fed's policy review amid concerns about the Omicron variant of COVID-19.
The Nifty50 has lost almost 300 points in four days. The Bank Nifty failed to hold on to the green to end down 0.3 percent.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a reasonable negative candle on the daily chart, a sign of more weakness or consolidation in the next session, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. 
Technically, a confirmation is required for a reversal in the current downtrend, Nagaraj said. "Going by long-term charts, a larger degree of lower tops and bottoms can be observed ahead," he added.
Time to focus on quality
Major support for the 50-scrip index exists at 17,050-16,900 levels, said Rahul Sharma, Co-Founder of Equity99. He believes the market to bounce back towards 17,500 in the coming days. "Every correction will work as an opportunity to invest in fundamentally strong companies," he added.
Here are key things to know about the market before Thursday's session:
SGX Nifty
At 10:24 am on Thursday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty50 index -- were up 92.5 points or 0.5 percent at 17,344, suggesting a positive opening ahead on Dalal Street.
Global markets
Equities in other Asian markets tracked Wall Street higher after the Fed said it would end its pandemic-era bond buys in March and make way for three interest rate hikes next year to tackle inflation. "The economy no longer needs increasing amounts of policy support," Fed Chair Jerome Powell said.
MSCI's broadest index of Asia-Pacific shares was up 0.3 percent in early hours. Japan's Nikkei 225 was up 1.6 percent and China's Shanghai Composite 0.3 percent, but Hong Kong's Hang Seng down 0.6 percent.
S&P 500 futures were up 0.1 percent in Asia. On Wednesday, the three main Wall Street indices surged 1.1-2.2 percent after the Fed announcements.
What to expect on Dalal Street
HDFC Securities' Shetti fears more of decisive weakness in the Nifty50 could open levels of 17,000-16,900 in the short term. "Any upside bounce from here could find strong resistance around 17,350-17,400 levels," he said.
One can expect a breakout if the Nifty crosses the immediate hurdle near the 17,300-17,400 zone, according to Rohit Singre, Senior Technical Analyst at LKP Securities. "If the index manages to hold above good support at 17,200, a swift bounce can be expected, else it may head towards another support zone at 17,100-17,000 levels," he said.
Key levels to watch out for
Nifty50: Support for the index remains at 17,150 whereas resistance has come closer by 100 points at 17,400 now, according to Palak Kothari of Choice Broking.
Bank Nifty: For the banking index, Kothari sees support at 36,300 and resistance at 37,500.
FII/DII activity
Foreign institutional investors (FIIs) net offloaded Indian equities worth Rs 3,407 crore on Wednesday. However, domestic institutional investors made net purchases of Rs 1,553 crore, according to provisional exchange data.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 17,500, with more than 1.6 lakh contracts, and the next highest at 17,600 with 1.5 lakh contracts. The maximum put open interest is at the 17,000 strike with nearly 91,000 contracts, according to exchange data.
This suggests resistance at 17,500-17,600 levels, and support only at 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 (%)
TVSMOTOR73,76,600672.551.37%24.63%
TORNTPOWER34,00,500593.451.69%13.15%
TRENT22,80,1251,036.600.26%7.44%
ABBOTINDIA33,17518,6101.41%7.01%
M&M1,23,63,400845.90.71%5.88%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
CUMMINSIND14,67,000942.3-2.73%-4.25%
PERSISTENT3,72,4504,385-0.93%-3.87%
PFIZER2,21,6254,990-4.13%-3.61%
GSPL15,77,600308.55-3.59%-3.56%
NATIONALUM9,54,89,000100.65-1.71%-2.91%
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
INDHOTEL1,25,40,596199.80.33%-0.99%
LALPATHLAB5,19,0003,508.150.32%-0.84%
SRF34,35,6252,166.950.14%-0.80%
METROPOLIS6,06,8003,295.200.66%-0.49%
UBL12,28,5001,591.200.19%-0.46%
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
IEX2,94,71,250263.3-6.10%21.08%
ABFRL1,00,15,200283.75-0.33%11.63%
BAJFINANCE40,04,6256,883-3.06%9.96%
BAJAJFINSV6,43,20016,740-2.73%7.73%
ATUL41,2508,627.50-2.38%7.09%
(Increase in open interest and decrease in price)
52-week highs
In the BSE 500 index, Adani Green, Adani Total Gas, Zee, Tanla, Fine Organic, Vardhman Textiles and KPR Mill were among the 10 stocks that hit 52-week highs.
52-week lows
No stock in the broadest index on the bourse hit a 52-week low. Go Fashion and SJS Enterprises were among the few other stocks that hit the trough.
Volatility index
NSE's India VIX index — which gauges the expectation of volatility in the market — rose 1.6 percent to 17.2 level on Wednesday, having surged as much as 4.5 percent during the session.
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