Benchmark Equity Indices managed to end the week with marginal gains during last week amid rising uncertainty over the new variant of Covid-19. The 30-share BSE Sensex settled 112 points, or 0.20 percent, higher at 57,124 on December 24 against 57,011 on December 17. Likewise, the 50-share NSE Nifty index advanced nearly 19 points, or 0.10 percent to 17,003 during the same period. As many as 22 stocks in the Nifty index ended in the green. Nifty outperformed Bank Nifty during the week.
DALAL STREET SUMMARY
Major benchmark indices witnessed high volatility during the week as the impact of the Omicron variant continued to puzzle investors. Despite a sharp plunge on Monday, a pullback rally during the week resulted in a flat weekly close for benchmark indices. Nifty ended near flat to positive up 0.10% and closed at 17003.75 levels while Bank Nifty was volatile during the week, falling 2.07% and closed at 34857.05. Nifty index outperformed the Bank Nifty index by 2%, volatility index ends around 16.15.
On the last day of the week i.e., on Friday, Benchmark indices snapped a three-day winning streak and ended lower. Nifty was down 0.40% at 17,003.75. Except IT, all other sectoral indices ended in the red. HCL Technologies, Tech Mahindra were the Top gainers of the week.
On the sectoral front,
IT & Pharma stocks were the darlings of investors throughout the week. A plunging rupee and stellar numbers from Accenture have made IT stocks more attractive while pharma stocks are rising because of omicron fear and due to the reasonable valuations.
Nifty IT (up 2.89%) and Nifty Pharma (up 1.92%) were among the Top gaining sectors. Whereas Nifty PSU Bank (down 3.10%) and Nifty Financial Services (down 1.84%) were among the Top losing sectors.
Domestic institutional investors (DII) are continuously buying but Foreign institutional investors (FIIs) have been selling continuously in the Indian Equity cash market. During last week DII bought shares worth Rs 6915.56 crore shares, while FII were the net sellers as they sold Rs 6589.03 crores worth of shares.
Major Weekly Gainer and Loser of Nifty 50
HCL TECH (up 8.01%) & CIPLA (up 5.59%) were among the Top weekly gainers.
NTPC (down 3.42%) & GRASIM (down 3.30%) were among Top weekly losers.
Now, what’s next and what should investors do??
Next week is exceptionally quiet as the economic calendar is light so there won’t be sharp market moves with a spotlight being on Omicron, but Bulls doesn’t look tired so in the upcoming week. Now, all eyes are on the December quarter results that will start coming out soon and then the budget after that, so we believe it makes sense to start building up cash gradually and take it up to atleast 20-25% of the portfolio if not more.
Technical View of Nifty and Bank Nifty (Weekly as well as Intraday)
Nifty
The major benchmark index opened the week under heavy bearish pressure and made a fresh quarterly low at 16410 amid weak global cues and omicron. However, it recovered smartly in the next two sessions on erasing fear of omicron.
The index corrected oversold conditions and traded high as 17150 but could not retain its gains and ended the week pretty much unchanged.
Technically, Index has formed a bearish outside bar along with an engulfing bear candle on the daily chart and formed a type of hammer candle on a weekly time frame.
Index completed its Fibonacci 50% retracement and tested the hourly upper Bollinger Band and the weekly 20 DMA which indicated a short-term sideways momentum.
The momentum indicator stochastic suggests a negative crossover on the daily time frame which confirmed a bearish move for the upcoming session.
On the options front, the Nifty open interest put-call ratio is around 0.87 levels. Maximum call open interest addition was seen at 17200 strike. Whereas maximum put open interest is around 17000 strike, indicating a range of trading in upcoming sessions.
Support and resistance for Monday (Spot levels)
Technically, the 17200 mark retains its tag of a key hurdle. Aggressive buying is advised only above the 17200 mark.
Alternatively, expert a waterfall of selling below the nifty 16900 mark with aggressive downside risk at the 16800 mark.
Weekly Support and Resistance (Spot levels)
The short-term support for the Nifty is 16800. If it breaks that level, the short-term trend will turn down and the bears will take over. That could take the markets down to 16400.
On the upside, the resistance is at 17200–17500 and until we do not get past that, the current range-bound movement will continue.
Nifty Futures trading strategy for the day
Strategy – Either buy above 17080 for the targets of 17140–17200 or Sell below 16900 levels for the downside targets of 16800–16750.
Bank Nifty
The financial benchmark index opened on a negative note and continued to trade in a range. The index made a fresh quarterly low and continued to see volatile and whipsaw-like momentum as they respond to omicron-related development.
The market is closely eying the COVID situation. Any positive news could only help the index to make any sustained-up move, else volatility will continue.
Bank nifty ended marginally lower 761.60 or 2.14%.
Technically, Bank Nifty formed a bearish candle on a weekly time frame and continued to trade below 200-EMA on a daily time frame which indicated a sideways momentum will continue in the upcoming session.
The momentum indicator RSI continued to trade in the oversold category which indicated a sideways to bearish momentum.
On the options front, the Bank Nifty open interest put-call ratio is around 0.80 levels. Maximum call open interest addition was seen at 35000 strike. Whereas the maximum put open interest is around 34500 strike, indicating a range of trading in upcoming sessions.
Support and resistance for Monday (Spot levels)
Technically, the 35000 mark retains its tag of a key hurdle. Aggressive buying is advised only above the 35000 marks.
Alternatively, expert a waterfall of selling in the bank nifty below 34650 mark with aggressive downside risk at the 34350 mark.
Weekly Support and Resistance (Spot levels)
The short-term support for the Bank Nifty is 34500. If it breaks that level, the short-term trend will turn down and the bears will take over. That could take the markets down to 34000.
On the upside, resistance is at 35000–35500 and until we do not get past that, the current range-bound movement will continue.
Bank Nifty Futures strategy for the day
Strategy – Either buy above 35000 for the targets of 35200–35350 or Sell below 34700 levels for the downside targets of 34600–34350.
Top Stock Recommendations for the upcoming week
VAKRANGEE (CASH)
After a long consolidation and correction, the stock has given a strong breakout on the weekly chart. We have seen a strong move with volume in the last trading sessions. We will expect a major rebound in this stock in days to come. The momentum indicator RSI too supports our bullish view in this stock.
Strategy – Traders can buy around 40.50 for the upside targets till 44 and then to 46 levels in days to come. Support and Stop loss below 38, a daily close below 38 will negate our bullish view in the stock.
LTI (FUTURES)
LTI Futures stock is ready to give a trendline breakout on 30 minutes time frame. It is also taking support from 20 days moving average on hourly charts. If it breaks above the intraday high, we will expect more upside move in the coming days.
Strategy – Traders can grab the stock above 7210 for the targets of 7330 and then 7400 in the coming days. Support and stop loss will be below 7100 on a closing basis.
We are a SEBI registered investment advisor. The above free information is for education/knowledge purposes. Read the disclaimer on our website before trading / investing.