Indian stock markets are preparing for cautious trading on December 26, 2023, with benchmark indices likely to remain within a tight range. This comes against the backdrop of low trading volumes due to the holiday season, which has limited domestic market activity. Investors are expected to focus on technical levels and stock-specific opportunities, as indicated by trends from GIFT Nifty, which is trading near the 26,143 level, down 33 points from the previous Nifty futures close.
Following the market closure on December 25 for Christmas, the last trading day on December 24 saw both the Sensex and Nifty 50 close marginally lower as investors took profits. The Sensex fell by 116 points (0.14%) to settle at 85,408.70, while the Nifty 50 dropped 35 points (0.13%) to 26,142.10. This reflects a subdued market sentiment, with the Nifty Midcap100 declining by 0.6% and the Nifty Smallcap100 experiencing a slight gain of 0.3%.
Market Outlook: Sensex and Nifty 50
The Sensex is expected to continue trading within a narrow range, facing immediate resistance near 85,750 and crucial support around 85,300. If the index manages to sustain above 85,750, it could lead to a rally towards the 86,000-86,200 range. Conversely, should the index drop below 85,300, the likelihood of testing lower levels near 85,000 would increase.
The Nifty 50 remains in a consolidating phase but retains a positive outlook. The 20-day moving average, which aligns with the 26,050-26,000 range, serves as a significant support level. A breach above 26,300-26,350 could signal a potential uptrend, possibly leading to new highs. The resistance at the 26,200 level is noteworthy due to substantial call writing, while the heavy put open interest at the 26,000 strike reinforces this as a strong support area. The India VIX has decreased by approximately 2% to 9.19, suggesting a calmer market environment.
Bank Nifty: Consolidation Ahead
Looking ahead, the Bank Nifty is projected to continue its consolidation, establishing a base within the range of 58,500-60,100 in the upcoming weeks. Strength beyond last week’s high of 59,533 would pave the way for a potential upswing towards the recent all-time high of 60,100. Key support levels are positioned at 58,300-58,600, coinciding with the 50-day EMA and recent breakout areas. Resistance is observed around 59,550, with a breakout from this range likely to dictate the next directional move for the banking index.
In summary, Indian markets are set for cautious trading influenced by low volatility and holiday-induced trading conditions. Investors are advised to keep an eye on technical indicators as they navigate this period of consolidation.
