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Trade setup for Dec 20: More downside on cards for Nifty50? Check out key market cues before Monday's session

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Trade setup for Monday, December 20: The Nifty50 has formed a long bear candle on the daily chart, and one may expect further weakness in the short term, says Nagaraj Shetti of HDFC Securities. Here's what the technical charts suggest for the coming session on Dalal Street.

Trade setup for Dec 20: More downside on cards for Nifty50? Check out key market cues before Monday's session
Indian equity benchmarks tumbled 1.5 percent to more than one-week closing lows on Friday, dragged by losses across sectors barring IT stocks. Financial, automobile, oil & gas and metal stocks were the worst hit.
The Bank Nifty tanked 2.5 percent, extending losses to a fifth straight session.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a long bear candle on the daily chart, suggesting a sharp downward reversal after the bounce earlier this month, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
One may expect further weakness in the short term, he said.

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All eyes on Bank Nifty
The coming couple of sessions will be crucial for the 50-scrip index, said Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One. He said he won't be surprised if the Nifty tests 16,500-16,200 levels, which is the best possible zone from where a recovery can happen. The banking space is likely to dictate the short-term trend the way it is placed, he said.
"Traders are advised to stay light on positions and even if the market attempts to recover, one should avoid aggressive longs till 17,700 is not surpassed. Before this, levels of 17,100-17,200 are to be considered immediate hurdles," Chavan added.
Here are key things to know about the market before Monday's session:
SGX Nifty
At 7:49 am on Monday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty50 index -- were down 83.5 points or 0.5 percent at 16,935.5, suggesting a negative start ahead on Dalal Street.
Global markets
Asian stock markets slid on Monday as surging Omicron cases triggered tighter restrictions in Europe. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.8 percent in early hours. Japan's Nikkei 225 index was down 1.7 percent, China's Shanghai Composite 0.5 percent and Hong Kong's Hang Seng 0.7 percent.
S&P 500 futures were down 0.9 percent in Asia.
The three main Wall Street indices fell on Friday, though gains in technology stocks provided some support, limited the Nasdaq Composite's loss at 0.1 percent. The S&P 500 and the Dow Jones ended one percent and 1.5 percent lower respectively.
What to expect on Dalal Street
A bearish continuation pattern is appearing on the weekly chart, according to HDFC Securities' Shetti. One may expect the Nifty to drop to 16,750 and even lower levels this week, with immediate resistance at 17,180, he said.
"The Nifty50 index has broken 61.8 percent retracement of the recent leg of a rise as well as the lower end of a rising channel on the hourly chart. This shows that the short term range has shifted lower," said Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas.
Ratnaparkhi expects 16,780-17,400 to be the short-term range for the index going ahead, with buying support near the recent low of 16,782.
Key levels to watch out for
Nifty50: Support for the index is expected at 16,900 and resistance at 17,300, according to Palak Kothari of Choice Broking.
Bank Nifty: For the banking index, Kothari sees support at 35,300 and resistance at 36,600.
FII/DII activity
Foreign institutional investors (FIIs) net offloaded Indian equities worth Rs 2,069.9 crore on Friday. However, domestic institutional investors made net purchases of Rs 1,478.5 crore, according to provisional exchange data.
Call/put open interest
The maximum call open interest is accumulated at the strike price of 18,000, with 1.5 lakh contracts, and the next highest at 17,300, with 1.1 lakh contracts. The maximum put open interest is at the 17,000 mark, with more than 74,000 contracts, and the next highest at 16,500, with nearly 55,000 contracts, according to exchange data.
This suggests immediate resistance at 17,300 and support at 16,500.
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:
SymbolCurrent OICMPPrice change (%)OI change (%)
Persistent4,3504,712.504.26%26.09%
Wipro1,22,400675.953.75%11.68%
Infosys49,65,30050.22.81%35.20%
Birlasoft27,30010.452.06%5.00%
LTI5,400132.51.92%28.57%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
Idea64,26,00,00014.15-4.07%-2.27%
Tata Motors7,81,12,800471.75-4.34%-5.97%
ICICI Bank8,28,53,375730.95-1.83%-5.45%
GMR Infra13,26,37,50041.5-3.15%-3.31%
SAIL14,42,43,250112.5-1.40%-2.94%
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
Sun Pharma3,30,56,100769.850.53%-5.26%
HCL Tech1,99,35,3001,173.850.80%-6.05%
Power Grid1,83,34,854203.40.57%-1.55%
Mphasis14,94,0253,265.051.27%-2.87%
Coforge7,31,7005,390.000.15%-5.68%
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
Indiabulls Housing1,43,40,600234.45-8.26%934.90%
PNB6,21,28,00038.15-4.03%7.06%
Zee9,30,81,000344-6.98%3.42%
ITC2,82,36,800219.6-2.25%11.46%
Bank of Baroda1,17,70,20085.45-4.47%25.28%
(Increase in open interest and decrease in price)
52-week highs
In the BSE 500 index, Tech Mahindra, Birlasoft, Persistent, KPR Mill and Grindwell Norton hit 52-week highs.
52-week lows
Twelve stock in the broadest index on the bourse hit 52-week lows: Bajaj Auto, City Union Bank, Gillette, HDFC AMC, MGL, MRF, Sanofi, Whirlpool, Strides Pharma, Gulf Oil Lubricants, Colgate Palmolive and Akzo Nobel.
Volatility index
NSE's India VIX index — which gauges the expectation of volatility in the market — rose 2.8 percent to settle at 16.3 on Friday.
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