The mid-day scare proved to be a dampener for the markets that had otherwise staged a remarkable resumption of the up move following two days of really weak trade. The markets opened on a flat note but grew stronger in the morning session and surpassed the 17,300 level. However, uncertainty gripped Nifty once again given the Omicron fears. The index shed all of its grains to slip in the negative territory. It did spend some time in positive territory but closed 70 points or 0.41 per cent lower. Although Nifty came off 390 points from day’s high, the market breadth remained stable, with 28 stocks settling lower and 22 higher. We enter the penultimate day of expiry of the weekly options and the options data show 17,000 continuing to hold maximum Put Open Interest. This means that if Nifty opens above 17,000 and stays above this level, there are fair chances of a short-covering led rally. It is important to note that a significant number of fresh shorts have been added. Along with Tuesday’s decline, Nifty December futures also added over 4.04 lakh shares or 3.70 per cent in net Open Interest.88014474The opening on Wednesday will be crucial. The levels of 17,090 and 17,165 will act as probable resistance points. The supports come in at 16,900 and 16,830 levels. The Relative Strength Index (RSI) on the daily chart is 31 and shows a bullish divergence against the price. The daily MACD, however, is bearish and stays below the signal line. On the charts, a candle with a long upper shadow emerged. Generally, such candles are bearish but given the fact that this one has occurred near the support levels following a decline, the current formation/candle should be best ignored.All in all, the uncertainty created by the impact of Omicron variant is keeping the situation fluid and it is also infusing volatility in the markets. In the present technical setup, even if the downtrend persists, it should not be without some technical pullback. The Nifty stays oversold on short-term parameters. It is recommended to stay away from heavily leveraged exposures. Looking at the amount of shorts that exist, it is also recommended that shorts should be avoided. All exposures should be kept in modest quantities and limited to low beta stocks and those that have a strong relative strength against the markets. Continuation of cautious approach is advised for the day.Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based at Vadodara. He can be reached at milan.vaishnav@equityresearch.asia