The Indian equity markets snapped their winning streak and witnessed a gradual correction throughout Tuesday's session as investors remained cautious ahead of US inflation data and the Federal Reserve's policy announcement.
Among sectoral indices, all ended in the red with capital goods, oil & gas, power and realty shedding 1% each except for Metal. The BSE midcap index fell 0.4% and the smallcap index was down 0.2%.
From the Sensex pack, Sun Pharmaceutical Industries, IndusInd Bank, Maruti Suzuki, Titan, and Reliance Industries settled in the red, while UltraTech Cement, JSW Steel, Axis Bank, TCS, and Wipro ended in the green.
What Are The Experts Saying?
Osho Krishan of Angel One said that the traders opted to take money off the table ahead of the FOMC outcome and stayed light on positions. "A broad-based profit booking signalled an early sign of caution for the aggressive buyers."
Going forward, Krishan advised traders to have a pragmatic approach as the recent development could be seen as the initial sign of cool-off amidst overbought parameters. "The FOMC outcome and its reaction to the global bourses will be crucial to watch for, which may act as a catalyst to setup the near-term trend for our markets. Meanwhile, identifying thematic movers would be an apt approach in current market conditions to have an outperformance," he said.
"Globally investors await US inflation data as this would provide some clues on Federal Reserves’s move in its policy meeting which will commenced from today. Fed’s policy outcome will provide some direction, untill than market are expected to consolidate. IPO market is again action with six IPO’s in pipeline starting with India Shelter Finance and DOMS open for subscription on Wednesday," said Siddhartha Khemka, Head - Retail Research at Motilal Oswal.
What Do The Nifty 50 Charts Indicate?
The Nifty50 index opened with a gap up but lost steam quickly and attracted some profit booking. Eventually, the Nifty index concluded the day around 20900 levels, shedding 0.43% from the last closure.
According to Rupak De of LKP Securities, the Nifty has formed a bearish engulfing pattern on the daily chart, suggesting a possibility of a bearish reversal. "On the higher end call writers have built a heavy position at 21000. On the lower end, put writers are heavily present at 20,800 and 20,900. Therefore, the Nifty is likely to remain mostly sideways to negative as long as it remains below 21000."
De said that only a decisive move above 21,000 might induce a resumption of the uptrend. Support is placed at 20,800, below which the index may consolidate further, he said.
"From a technical point of view, there has been a mere alteration in the price chart for Nifty, but the recent candlestick formations certainly showcased the exhaustion of the bullish strength and might attract price-wise correction post the rally," Krishan said.
As far as the levels are concerned, the analyst said that 20850-20800 is likely to be seen as immediate support, followed by the bullish gap around 20700. On the flip side, 21000-21040 withholds a significant hurdle, followed by the 21100 zone, he said.
According to Deepak Jasani of HDFC Securities, "Nifty formed a bearish Engulfing Top pattern, for the first time in the up move from October 26, 2023. It also closed at the lowest in three sessions. The possible lower presence of FPIs led to lower volumes and a modest fall in indices. Nifty could now face resistance at 21038 while the 20809-20850 band could offer support. 20703 on the downside is a crucial support level to protect."
"Nifty formed a bearish Engulfing Top pattern, for the first time in the up move from October 26, 2023. It also closed at the lowest in three sessions. The possible lower presence of FPIs led to lower volumes and a modest fall in indices. Nifty could now face resistance at 21038 while the 20809-20850 band could offer support. 20703 on the downside is a crucial support level to protect," said Deepak Jasani - Head Retail Research at HDFC Securities.
"Nifty level of 20,850 serves as an immediate support, a breach of this level might pave the way for the index to test 20,700 in the upcoming days. Meanwhile, the upper band of the Bollinger Band on the hourly chart, positioned around 21,040, signifies a resistance zone," said Om Mehra, Technical Analyst, SAMCO Securities.
Bank Nifty: Lower-end support positioned at 46800
Bank Nifty closed the session at 47,097.55, forming a bearish candle with a large red body and a smaller wick on the higher side, which was followed by a shooting star in the previous session, Mehra said. "Bank Nifty is trading in a wider range with support at 46,500 and resistance at 47,600; the Index will find a trendy direction once these levels are broken."
The Bank Nifty moved in a lower high formation throughout the day to close at 47,098, down 217 points, said Ashwin Ramani, Derivatives & Technical Analyst at SAMCO Securities.
"The call writers have strengthened their positions at 47,500, 47,400, 47,300 & 42,200 Strike in Bank Nifty. The Index has given a lower close on the daily chart. The option activity at 47,000 Strike will provide cues about Bank Nifty’s Intraday direction ahead of the weekly expiry Wednesday (tomorrow)," Ramani said.
According to Kunal Shah of LKP Securities, the Bank Nifty index encountered resistance at higher levels, facing selling pressure and struggling to breach the 47500 mark.
"The lower-end support for the index is positioned at 46800, and a decisive break below this level could trigger additional downside movement toward the 46400 levels. With weekly expiry approaching, heightened volatility is anticipated," Shah said.
The analyst advised traders to exercise caution and implement strict stop-loss measures on both sides of the market.
Here are the stocks to watch out for ahead of Wednesday's trading session:
Indian Bank has launched its qualified institutional placement (QIP) to raise up to ₹4,000 crore. The lender's board has set the floor price for the issue at ₹414.44 per share.
Bank of Baroda will consider fund raising on December 15, 2023.
Axis Bank likely to see change of hands up to 1.1% equity or 3.34 crore shares via a block deal.
Equitas Small Finance Bank has appointed Ashwini Biswal as its Chief Compliance Office with effect from January 28, 2024.
Laurus Labs: US FDA issues Form 483 with five observations for manufacturing facility of company’s arm Laurus Synthesis. The company will address the observations within stipulated timelines.
First Published: Dec 12, 2023 9:15 PM IST
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