Before the final hour of trading began, the Nifty 50 fell to the lowest point of the day, even breaking below the March 16 low of 16,850 to make a new low of 16,828.

Just then, news reports began to do the rounds of Russian President Vladimir Putin and Chinese President Xi Jinping discussing proposals to halt the ongoing war in Ukraine. While there was no concrete confirmation of the same, that was enough to spark a recovery in the Dow futures first, followed by the domestic markets.

By closing, the Nifty 50 had recovered 170 points from the session’s low, even briefly clawing back above 17,000, before final-tick adjustments led to a closing below it.

We had mentioned during our trade setup on March 20 that the bulls will look to defend both 17,000 and 16,850 on the downside ahead of the FOMC rate decision later this week. They managed to succeed on the latter and nearly succeeded on the former as well.

With positive cues emerging from the global markets overnight, a bounce in today’s session cannot be ruled out. However, analysts continue to maintain that the trend remains on the downside.

Anil Sarin of Centrum PMS spoke to CNBC-TV18 about the sectors where he finds value even in this volatile market. ““Infrastructure is one area where there is an availability. Real estate also has a lot of strength. Healthcare quite independent of everything else is doing quite well. Select technology stocks, not to be confused with IT stocks but technology oriented, digital business model kind of companies which are focused on the Indian market. So, their pockets where you should consider nibbling even under this bad market condition,” he said.

What do the charts suggest for Dalal Street?

Jai Bala of cashthechaos.com said that 16,400 on the downside is a very crucial support for the Nifty 50 and expects the index to fall below levels of 16,747 in the coming days. He added that banks, IT and stocks like Reliance may lead the downside further. For Reliance Industries, which has now declined for eight consecutive trading sessions, Bala said that levels of 2,180, which was Monday’s low, will be crucial for the stock to hold on a closing basis.

The Nifty 50 has formed a hammer candlestick pattern during Monday’s trading session, according to Ruchit Jain of 5paisa.com. This indicates that the bulls are trying to defend the 16,850 zone and may look to lift the market higher from these levels. FIIs also have record short positions with 90 percent on the short side, he said. Immediate resistance for any pullback will be in the range of 17,150 – 17,225.

The Nifty Bank index has also formed a hammer pattern on the daily chart after it managed to hold the support level of 39,000, according to Kunal Shah of LKP Securities. He said that the index remains in buy mode as long as it remains above that level, with upside resistance seen at 39,700 – 39,800 and a break above this will lead to further short-covering.

Here are key things to know about the market ahead of the trading session on March 21:

SGX Nifty

On Tuesday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty 50 index — declined 86 points or 0.50 percent to 17,076, thereby pointing to a negative opening for the market.

Global Markets

Functioning markets in the Asia Pacific have opened higher ahead of the FOMC meeting which begins later today. The Kospi and Kosdaq in South Korea are trading 0.7 percent higher, while Hong Kong futures are also pointing to a positive opening.

Japanese markets are shut on account of a holiday.

Benchmark indices on Wall Street saw a relief rally on Monday. The Dow Jones closed with gains of over 380 points, while the S&P 500 added 0.9 percent.

What to expect on Dalal Street

Sameet Chavan of Angel One said that 16,900 and 16,800 are key support zones for the Nifty 50. “Markets are extremely oversold, and we are placed around a cluster of supports; hence, we continue to remain hopeful and expect some respite in the coming days,” he said. However, Chavan advises avoiding aggressive bets. 17,150 on the upside is seen as a key level.

The Nifty 50 had a positive divergence on the Relative Strength Index, indicating a bounce back at current levels, according to Rohan Patil of SAMCO Securities. However, he maintained that the bounce can be short-lived as prices may face pressure at higher levels. He expects the Nifty 50 to fall towards 16,500, in case the index breaks below the 16,800 mark.

Nagaraj Shetti of HDFC Securities said that the short-term trend of the Nifty 50 continues to be negative. He intends to see a sustained upside above levels of 17,150 to confirm a short-term bottom for the index.

Key Levels To Watch

For Thursday’s weekly options expiry, the 17,200 strike call of the Nifty 50 index added 27.1 lakh shares in Open Interest. The 16,900 call option added 24.55 lakh shares, while the 17,100 call saw addition of 5.19 lakh shares.

On the downside, the 16,900 put added 15.3 lakh shares in Open Interest, followed by the 16,700 put, which added 13 lakh shares. Close to 10 lakh shares were also added on the 16,800 put option.

Nifty 50’s put-call ratio is now at 0.83 from 0.87 on Friday.

Among stocks, GNFC is out of the F&O Ban, Biocon has entered the ban, while Indiabulls Housing Finance continues to remain in the ban period.

FII/DII activity

Long Build-up (Increase In Price and Open Interest)

Short Build-up (Decrease In Price and Increase In Open Interest)