Sensex, Nifty set to snap 4-day gaining streak; key levels to track on August 20

Foreign investors (FIIs/FPIs) turned net sellers again on Tuesday, after a day of buying, offloading Indian equities worth Rs 634 crore.

Nifty and Sensex are set for a soft start on Wednesday as profit-booking at higher levels threatens to cool the market’s four-day winning streak. At 8:20 am, Gift Nifty hinted at a muted open, trading at 24,966, down 45 points or 0.18 percent.

Indian equities surged on August 19, notched a fourth straight day of gains on August 19, powered by strong rallies in auto, oil & gas, metal, and FMCG stocks. The cheer spread across the board, with mid and smallcaps stealing the spotlight as they outpaced the frontline indices.

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Foreign investors (FIIs/FPIs) turned net sellers again on Tuesday, after a day of buying, offloading Indian equities worth Rs 634 crore. Domestic institutional investors (DIIs), meanwhile, sustained their support with net purchases of Rs 2,261 crore, according to provisional exchange data.

Here are the key levels to watch out for in today's session

Nifty continues to demonstrate strength while holding above its gap support near 24,800. A sustained breakout above 25,050 could unleash strong bullish momentum, as significant call writers risk being trapped, leading to potential short covering. On the downside, any dip towards the 24,750 zone is likely to be absorbed as an accumulation opportunity. Robust positioning by Put writers at near-the-money strikes further reinforces this constructive view. Only a decisive breach below 24,700 would warrant caution; until then, the bulls are expected to maintain control. For now, a “buy on dips” strategy remains the most prudent approach, with traders closely watching for a decisive breakout to resolve the current consolidation phase.

"While the Nifty Bank index has managed to sustain higher levels, private sector banks are yet to exhibit decisive strength, leading to choppy momentum. The immediate roadblock remains at 56,000–56,100, and only a breakout above this zone would unleash strong bullish momentum through short-covering activity," Dhupesh Dhameja of SAMCO Securities said. "On the downside, dips towards 55,500 remain attractive for accumulation as Put writers continue building positions at near-the-money strikes. A breach below 55,450 would be the first sign of weakness, but until then, bulls are likely to retain control. In the current scenario, a “buy-on-dips” strategy remains prudent, with traders closely monitoring the 56,100 level for a breakout that could potentially resolve the ongoing consolidation phase," he added.

India VIX fell sharply by 4.46 percent to close at 11.79. Despite lingering global headwinds, volatility remains subdued, reflecting expectations of consolidation rather than a steep correction. This indicates cautious optimism among market participants without evident signs of fear.

The Put-Call Ratio (PCR) has risen from 0.85 to 1.11, underlining the strengthening grip of put writers at current levels. The increasing PCR, or being higher than 0.7 or surpassing 1, means traders are selling more Put options than Call options, which generally indicates the firming up of a bullish sentiment in the market.

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