As the December expiry nears its conclusion, market participants are bracing for heightened volatility and subdued volumes, which are likely to guide the Nifty’s movement on its final trading day. With cautious market sentiment in place, traders are focusing on crucial resistance and support levels that will dictate the near-term market direction.
Market Overview: Nifty’s Bearish Trend Continues
On December 24, the Nifty index failed to sustain the positive momentum observed just a day earlier. Despite an optimistic opening, the index soon faced selling pressure near the 23,900 mark, resulting in a range-bound session and eventual declines. The Nifty closed at 23,727.65, marking a 0.11% drop and forming a bearish candlestick pattern that signals a potential pause in the ongoing uptrend. The 23,900 level continues to pose a significant resistance, aided by the 200-day moving average (DMA) aligning near this zone.
Market experts note that the index’s failure to decisively break past this resistance suggests further sideways-to-bearish movement. The downside risk remains tangible, with the next crucial support at 23,535. If this level fails to hold, a deeper pullback toward 23,300 could be imminent. However, there’s a glimmer of hope for a short-term bounce as India VIX, a measure of volatility, eased to 13.18, signaling that market anxiety might be subsiding for now.
Sectoral Performance: Metal Stocks Reverse Gains, Auto Stocks Show Mixed Trends
Sector-wise, metal stocks witnessed a reversal of Monday’s gains, emerging as the top losers in the market. On the flip side, auto stocks showed a mixed performance. December’s registration data pointed to some strength in the sector, but overall market conditions kept the stocks from making any significant headway.
One of the notable movers during this otherwise quiet trading session was Tata Group stocks. Despite the weak market backdrop, stocks like Tata Steel and Tata Motors surged by up to 13%. This rally came on the back of reports about Tata Capital preparing for a potential ₹15,000 crore IPO. This IPO could provide a fresh wave of optimism for the group, further energizing its stocks heading into the new year.
Nifty50 Technical Indicators: Testing Resistance at 23,900
The Nifty index faces immediate resistance in the 23,900–24,000 range, a critical zone that traders will watch closely. This range aligns with the 200-day simple moving average (SMA), adding weight to its resistance. For the index to shift towards a bullish stance, a decisive break above this zone is needed, according to analysts like Om Mehra of SAMCO Securities.
On the downside, if the index falls below the 23,535 support, it could signal deeper losses, potentially dragging the index closer to the 23,300 level. Traders should stay alert for any breakdowns below these levels as they could spark renewed selling pressure.
Here’s a quick look at the key levels to monitor for Nifty50:
- Immediate resistance: 23,900–24,000
- Immediate support: 23,535
- Critical support: 23,300
The Nifty Bank Index: Consolidation and Coiling Patterns
The Nifty Bank index has been consolidating within a narrow range of 51,137–51,382. Despite the range-bound movement, the daily Relative Strength Index (RSI) is in the oversold zone, hinting at the possibility of a short-term recovery. However, 51,800 remains a strong resistance level, and the index will need to close above this to confirm any bullish trend.
The downside risk for Nifty Bank is relatively clearer, with immediate support at 50,750. A breach below this level could lead to further weakness, pulling the index towards lower levels. According to market expert Om Mehra, the formation of a “coiling inside bar” pattern suggests that the Nifty Bank index is gearing up for a decisive breakout, making these levels crucial to watch for the final trading day of the year.
F&O Insights: Rollovers and Open Interest Trends
Futures and Options (F&O) data indicate that the Nifty 50’s futures showed an increase in Open Interest (OI) by 0.2% on December 24. Rollovers for the December expiry are at a relatively healthy 60%, signaling cautious optimism. Futures for the December expiry are currently trading at a premium of 42.95 points, up from 16.3 points earlier. On the Put side, strikes at 23,450 and 23,700 have seen significant additions in Open Interest, while the 23,500 and 24,000 strikes have seen reductions.
Notably, Bandhan Bank, Granules India, Hindustan Copper, and Manappuram Finance are out of the F&O ban for the day. However, RBL Bank continues to remain in the ban.
The key F&O levels to watch for Nifty 50 are:
- Call side resistance: 23,750–24,100
- Put side support: 23,450–23,700
Key Stocks to Watch
In the run-up to Thursday’s expiry, several stocks are in focus:
- Nalco India: The company has signed a mining lease deed for the Utkal-D and Utkal E-Coal block, set to boost coal production capacity to 4 MTPA.
- BPCL: The company emerged as the lowest bidder for NTPC’s 150 MW Solar PV power project, a deal worth ₹756.45 crore.
- Bharat Forge: The company is infusing €39 million into its arm, Bharat Forge Global Holding GmbH.
- Panacea Biotec: The company secured a $14.95 million contract from UNICEF to supply bivalent oral polio vaccine doses.
What Lies Ahead for Nifty?
As the final expiry of 2024 approaches, the Nifty is stuck between critical support and resistance levels. Traders will be looking for a break either above 23,900 or below 23,535 to determine the market’s near-term direction. With low volumes and high volatility expected, this expiry day could be a tricky one for market participants. The outcome of the third-quarter earnings and the upcoming Union Budget remain crucial factors that could sway the market heading into the new year.
