Trade Setup for December 15: Charts suggest more upside for Nifty 50, can move towards 21,400

The US Federal Reserve indicating three rate cuts in 2024 led to a huge surge in equities globally and the Indian stock market was no exception. Moving in-line with global peers, the Indian equity benchmark indices scaled a record high with the Nifty50 index surpassing 21,200 & Sensex 70,600 for the first time on Thursday. Also, the market capitalisation of BSE-listed companies surged to an all-time high of ₹355 lakh crore, with investors becoming richer by ₹3.83 lakh crore.

At close, the 30-pack BSE Sensex rose 1.34% to 1.34% and the broader Nifty, too, climbed 1.23% to end at 21,182.70.

In the broader market, the BSE midcap gauge jumped 1.06% and smallcap index climbed 0.62%.

Among sectors, Nifty Bank, Nifty Financial Services, Nifty Reality, Nifty IT and Nifty oil & gas gained the most while Media, Healthcare and consumer durables ended mildly in the red.

Foreign Institutional Investors (FIIs) continued to remain buyers as they bought equities worth ₹3,570.07 crore, while Domestic Institutional Investors (DIIs) bought ₹553.17 crore in equities on Thursday, according to exchange data.

The GIFT Nifty is trading with a premium of more than 90 points from Nifty Futures' Thursday close, indicating a gap-up start for the Indian market on Friday.

Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy expects the strong uptrend in Nifty and Bank Nifty to continue through Friday and Monday, offering investors potential opportunities to take profits on Monday with each market dip on Friday, representing a buying opportunity.

Though the midcap and smallcap pack is also aligned with the move, Ajit Mishra of Religare Broking recommended traders to maintain extra caution in stock selection, citing the overbought conditions. "We reiterate our preference for banking and IT majors and suggest staying selective in others."

"The market continued its exuberance and hit a fresh high amid the dovish commentary from the Federal Reserve, signalling at least three rate cuts in 2024. Further, the sharp fall in US bond yields improved investors’ confidence. An upgrade in India’s GDP forecast, ease in global oil prices, and the RBI decision to clamp down inflation to the target level, led to a broad-based rally with outperformance from Realty and IT," said Vinod Nair, Head of Research at Geojit Financial Services.

Pranav Haridasan, MD and CEO at Axis Securities said the market is eyeing a new high in light of favourable macros. "We saw a good recovery last month in Indian equities due to a change in the macroeconomic narrative in favour of the overall equity market. Thanks to the dovish narrative from the US Fed, the Nifty 50 scaled to an all-time high level and crossed the 21,100 mark for the first time."

"Several factors contributed to this rally. There was a nearly 100 basis point decrease in US 10-year bond yields from their recent peak. The status quo maintained by the RBI, with a positive revision in FY24 GDP from 6.5% to 7%, sequential improvement in the high-frequency indicators, and robust earnings growth expectations, contributed to this momentum. The election results in three out of four key states have raised the expectations of policy continuity in 2024, boosting market confidence," Haridasan added.

Nifty continued its upward journey and registered a fresh all-time of 21210 today. The index rallied 256 points after the US Fed signaled slower growth and lower inflation. "Firm US indices may continue to rub off on our markets and we are now eyeing 21,500 in Nifty," Religare Broking's Mishra said.

"The index has broken out of consolidation, driven by an increase in long positions compared to short trades among participants. Sentiment remains robust as the index maintains a position comfortably above crucial moving averages," said Rupak De, Senior Technical analyst at LKP Securities.

De sees support at 21,000, where Put writers have significant position. Looking ahead, he said that there's a potential for the index to advance towards 21,400 and beyond on the higher side."

According to Devarsh Vakil - Deputy Head Retail Research at HDFC Securities, the next resistance for Nifty is seen at 21430, which happens to be 76.4% extension level of the recent swings. Psychologically important number of 21000 now becomes support for Nifty.

The Bank Nifty also hit a new high of 47,944 but witnessed some profit-taking at the higher levels. The index settled at a fresh closing high of 47,732, up 640 points, or 1.36%.

"The Bank Nifty bulls maintained their momentum, successfully surpassing the key resistance level of 47500 with significant trading volumes. The overall market sentiment remains bullish, and any temporary declines are considered buying opportunities, with a strong support level identified at 47000," said Kunal Shah of LKP Securities.

Shah expects the ongoing momentum to be driven by active participation from both private and PSU banks, which may propel the Bank Nifty index towards the 50000 mark.

The Nifty 50's December futures added 18.5% and 20.11 lakh shares in Open Interest on Thursday. They are trading at a premium of 144.95 points from 107.60 points earlier. On the other hand, Nifty Bank's December futures shed 5.4% and 1.02 lakh shares in Open Interest.

Nifty 50's Put-Call Ratio is now at 1.37 from 0.96 earlier.

Manappuram Finance and Steel Authority of India are new in the F&O ban list, while National Aluminium Company is out of the list. Meanwhile, India Cements, Hindustan Copper, Balrampur Chini, Delta Corp, Indiabulls Housing Finance, and Zee Entertainment Enterprises continue to remain in the ban.

For the expiry on December 21, the Nifty 50 call strikes between 21,200 and 21,400 have seen addition in Open Interest.

On the put side, the Nifty 50 strikes between 21,000 and 21,200 have seen addition in Open Interest ahead of December 21's expiry:

These stocks saw unwinding of their long positions on Thursday, meaning a decrease in both price and Open Interest:

PB Fintech: Income Tax officials visited Paisabazaar, a wholly-owned subsidiary of the company on December 13 and 14, 2023, and enquired about certain vendors of Paisabazaar. The company has provided information required by the IT officials.

Infosys to report the December quarter (Q3FY24) earnings on January 11, 2024.

Sterling & Wilson Renewable gets settlement amount of $30.54 million (approximately ₹254.20 crore) from Jinko Solar Co.

Texmaco Rail gets work order worth ₹1,374.41 crore from Ministry of Railways.

M&M Financial to foray into areas of life, health & general insurance (both group & individual).

Plenty Pvt Group and Multiples Pvt Group likely to sell 2.33% stake in PVR-INOX.

Hero MotoCorp to buy additional stake in Ather Energy for up to ₹140 crore. The company appointed Vivek Anand as CFO of the company effective March 1, 2024.

BHEL signs MoU with Central Manufacturing Technology Institute (CMTI) to collaborate on technology development in areas of hydrogen value chain & IIoT Solutions for predictive maintenance of machines and manufacturing processes.

Vedanta to consider issuance of Non-Convertible Debentures (NCDs) on private placement basis on December 19, 2023.

Satin Creditcare launches qualified institutions placement (QIP); floor price at ₹242.81 per share.

Genus Power Infrastructures wins order worth ₹1,026.31 crore.