The Indian stock market is facing headwinds today after a sharp drop in major indices, with Nifty 50 and Sensex showing signs of weakness. Here’s what you need to know about the trade setup and which stocks experts are recommending for Wednesday, December 18.
A Glance at the Market: Nifty 50, Sensex Hit Hard by Foreign Capital Outflow
The Indian stock market opened on a sour note as both the Nifty 50 and Sensex indices saw heavy losses in yesterday’s session. The 30-share BSE Sensex plunged 1,064.12 points, or 1.30%, to settle at 80,684.45, slipping below the key 81,000 mark. Meanwhile, the Nifty 50 dropped 332.25 points, or 1.35%, to 24,336, signaling a deeper pullback.
This decline was primarily driven by foreign capital outflows, as global market trends remained negative, compounded by rising caution ahead of upcoming decisions by global central banks. In particular, the ongoing uncertainty surrounding interest rate changes has led to investor hesitation, leaving the Indian equity markets vulnerable to global volatility.
Nifty 50 Technical Outlook: Bearish Signals Looming
From a technical perspective, the Nifty 50’s chart is raising red flags. According to Rupak De, Senior Technical Analyst at LKP Securities, a Harami pattern has formed on the daily chart, a bearish signal that typically suggests further downside risk. The index has also fallen below its 21-EMA (Exponential Moving Average), an indicator that suggests bearish momentum in the market.
“The short-term outlook for Nifty remains weak. We may see a further decline towards the 24,200 level, where initial support could kick in,” De said. A significant rebound might be possible if the Nifty manages to stay above this critical support level. However, any decisive break below this could trigger a more substantial correction in the market.
Key Technical Levels to Watch
- Immediate Support: 24,200
- Resistance Levels: 24,500–24,800
These levels will be crucial for investors to monitor as they will guide the market’s movement over the coming sessions.
Bank Nifty Outlook: Rangebound Trading Ahead
On the other hand, the Bank Nifty index, which represents the financial sector, has shown signs of exhaustion. Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates Ltd, pointed out that the index has formed a large red candle on the daily chart, signaling weakness.
“The Bank Nifty has been consolidating within a narrow range of 52,500 to 54,000. Any breakout from this range will likely determine the next move for the index,” Yedve explained. As it stands, a rangebound consolidation looks set to persist until one of these levels is breached.
Bank Nifty Key Support and Resistance
- Support Zone: 52,500
- Resistance Zone: 54,000
5 Stocks to Watch on December 18: Buy or Sell?
Given the current market conditions, some stocks have caught the attention of experts for potential buying or selling. Here are five stocks that investors should consider for Wednesday’s trading:
- Axis Bank (Buy)
Axis Bank has been showing strength relative to the broader market. Despite the overall weakness in the banking sector, experts believe that Axis Bank’s fundamentals remain solid, making it a good buy for investors looking for growth potential in the medium to long term. - Oberoi Realty (Buy)
The real estate sector has taken a hit, but Oberoi Realty’s consistent performance and solid market positioning make it a recommended stock for those seeking exposure in this space. Analysts are optimistic about the company’s future prospects. - United Spirits (Buy)
United Spirits, a leader in the Indian spirits market, continues to perform well, and its stock is considered a good buy by experts for those looking to take advantage of strong consumer demand in the alcohol sector. - National Aluminium Co. Ltd (Sell)
National Aluminium Co. Ltd, despite being a prominent player in the metal sector, faces challenges due to global macroeconomic factors, including softening demand and price fluctuations. Experts suggest caution with this stock. - Varun Beverages (Buy)
Varun Beverages, which is a key bottler for PepsiCo in India, is another stock experts are recommending for purchase. The company has a solid business model and has demonstrated resilience in the FMCG space.
US Fed’s Upcoming Policy Decision: A Potential Market-Mover
As markets brace for the US Federal Reserve’s upcoming monetary policy decision, all eyes are on how global central banks will react to inflation concerns and economic growth forecasts. The Fed’s stance on interest rates will be pivotal, especially as it could influence foreign capital flows and investor sentiment in Indian equities.
The market sentiment in India is closely tied to the global economic landscape, and the Fed’s decision could serve as a catalyst for either a rebound or further downside risk. Investors are advised to stay cautious and monitor developments closely, as the next few days could be critical in shaping the short-term direction of the market.
