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Trade setup for Dec 27: Can Nifty50 hold 17,000? Check out key market cues before Monday's session

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Trade setup for Monday, December 27: The Nifty50 has formed a reasonable negative candle on the daily chart with a minor lower shadow, says Nagaraj Shetti of HDFC Securities. Here's what the technical charts suggest for the coming session on Dalal Street.

Trade setup for Dec 27: Can Nifty50 hold 17,000? Check out key market cues before Monday's session
Indian equity benchmarks finished a choppy session lower on Friday, ending a three-day winning run dragged by financial and auto stocks. However, gains in IT, oil & gas and consumer shares limited the downside.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a reasonable negative candle on the daily chart with a minor lower shadow, overlapping the previous day's small doji candle, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
"This pattern indicates the formation of a bearish engulfing pattern at the swing high, suggesting a lower top reversal," he said.

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Not out of the woods
The market appears to be in a neutral zone from the bearish trend, said Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One.
"If the bulls have to regain the strength, levels of 17,200-17,300 need to be surpassed with some authority. This development will confirm the completion of the recent corrective phase and the bulls would probably be back in the driver’s seat thereafter. If this has to happen, the banking space, which is slightly lagging behind in the recovery, needs to step up. Till then, we are still not completely out of the woods," he added.
Here are key things to know about the market before Monday's session:
SGX Nifty
At 7:45 am on Monday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty50 index -- were down 35 points or 0.2 percent at 16,963, suggesting a weak start ahead on Dalal Street.
Global markets
Equities in other Asian markets were largely up though cautiously as investors assessed the impact of the Omicron variant of COVID-19 on the world economy. MSCI's broadest index of Asia Pacific shares was up 0.1 percent.
Japan's Nikkei 225 was down 0.2 percent. China's Shanghai Composite and Hong Kong's Hang Seng were up 0.1 percent each.
S&P 500 futures were up 0.1 percent. On Thursday, the three main Wall Street indices ended 0.6-0.9 percent higher, lifting the mood ahead of Christmas break. Encouraging developments eased investors' concerns about the economic impact of the Omicron variant.
On Friday, European shares closed lower in light holiday trading. The pan-European Stoxx 600 index jumped 0.9 percent.
What to expect on Dalal Street
HDFC Securities' Shetti believes the recent pullback rally has completed around strong resistance at 17,150-17,200 levels. "There is the possibility of further weakness down to 16,700-16,650 levels this week. Any upside bounce from here could be a 'sell on rise' opportunity," he said.
Angel One's Chavan has maintained a cautious stance from 18,000-plus levels. "This certainly played out well for us as the Nifty finally entered our projected target zone of 16,500-16,200 levels... The Nifty has maintained its position beyond 17,000, which is an indication that the bears have lost their steam," he added.
Independent technical analyst Manish Shah suggests avoiding selling into the market for the time being.
The Nifty needs to break above 17,300-17,320 with a strong conviction candle, which would break the falling trend-line and set the stage for a rally to 17,500-17,600 levels. As we go into the last week of 2021, the Nifty might just show a Santa Claus rally to light up the mood in the market," he said.
Key levels to watch out for
Nifty50: Immediate support for the index is expected at 16,800 and immediate resistance at 17,250, according to Mohit Nigam, Head-PMS at Hem Securities.
Bank Nifty: For the banking index, Nigam sees immediate support at 34,800 and and an immediate hurdle at 35,700.
FII/DII activity
Foreign institutional investors (FIIs) net offloaded Indian equities worth Rs 715 crore on Friday. However, domestic institutional investors made net purchases of Rs 43.2 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 1.2 lakh contracts, and the next highest at 17,200, with 1.1 lakh contracts. The maximum put open interest is placed at 16,500, with 1.2 lakh contracts, according to exchange data. This indicates the index is approaching immediate resistance at 17,200 followed by a major hurdle at 17,500, and has support at 16,500.
Long build-up
Here are two stocks that saw an increase in open interest as well as price, suggesting a build-up of long positions:
SymbolCurrent OICMPPrice change (%)OI change (%)
FSL62,92,000183.554.68%10.25%
MPHASIS14,28,0503,216.150.53%4.16%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
GRASIM1,07,16,0001,610.45-3.10%-58.43%
ADANIPORTS4,46,86,250721-1.67%-22.46%
UPL1,88,21,400748.9-0.95%-20.69%
SUNPHARMA2,78,93,600785.45-0.92%-19.46%
L&TFH5,60,24,87277.15-6.99%-16.31%
(Decrease in open interest as well as price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
MOTHERSUMI2,60,61,000215.250.16%-13.11%
BSOFT46,25,400530.70.09%-13.10%
COROMANDEL9,99,375742.20.60%-10.82%
DIXON3,54,3755,4180.61%-9.77%
COFORGE6,80,9005,657.703.35%-9.12%
(Decrease in open interest and increase in price)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
VOLTAS21,72,5001,190.10-1.55%2.05%
MFSL14,20,250948.55-1.77%0.46%
POWERGRID2,15,23,988205.35-1.53%0.02%
(Increase in open interest and decrease in price)
52-week highs
In the BSE 500 index, Infosys, Tech Mahindra, KPIT Tech, Persistent, Radico Khaitan, Schaeffler, Allcargo, Birlasoft and ESAB hit 52-week highs.
52-week lows
One stock in the broadest index on the bourse hit a 52-week low: Indostar Capital Finance.
Volatility gauge
NSE's India VIX index — which gauges the expectation of volatility in the market — rose two percent to settle at 16.2 on Friday, after dropping for three days in a row. 
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