Trade Setup for December 26: Volatility, low volumes to dominate Nifty moves on final expiry of 2024

The Nifty, after showing an upside bounce on December 23, failed to sustain its momentum on December 24, closing below 23,800 amidst volatile trading. Although the market opened on a positive note and moved higher during the early part of Tuesday’s session, selling pressure emerged near the 23,900 level. This led to a period of range-bound movement before further declines in the mid-to-late session, ultimately closing at the day’s low.

As the final trading session of the December expiry approaches, the Nifty continues to follow a sideways-to-bearish trajectory.

In sectoral performance, metal stocks reversed Monday’s rally to end as the top losers, while auto stocks saw a mixed close, reflecting December’s registration data.

On the stock-specific front, Tata Group stocks surged by up to 13% during an otherwise weak session, buoyed by reports of Tata Capital’s potential initial public offering (IPO). According to MoneyControl, following the listing of Tata Technologies more than a year ago, the Tata Group has begun preparations for the IPO of its financial services arm, Tata Capital. The IPO is expected to be worth approximately ₹15,000 crore.

The near-term market trajectory hinges on the outcome of the third quarter results and the Union Budget, but caution prevails due to a strong dollar, high bond yields, and concerns over rate cuts. The rupee hitting an all-time low, further evoked the caution, said Vinod Nair of Geojit Financial Services.

Foreign institutions continued to remain net sellers in the cash market on Tuesday, while their domestic counterparts were net buyers.

What do the Nifty50 charts indicate?

The Nifty closed at 23,727.65, down 0.11% on Tuesday, forming a bearish candle resembling a shooting star, hinting at a pause in the uptrend. In recent sessions, the index has struggled to breach the 23,870, marking these level as a strong resistance.

According to Om Mehra of SAMCO Securities, the 200 DMA, aligned near this level, adds further strength to the barrier, making it a critical hurdle for upward momentum. On the downside, a break below 23,535 could signal weakness and drag the index closer to 23,300. However, the easing of India VIX, which settled at 13.18, offers some optimism for a short-term bounce as a relief rally.

The near term trend of the Nifty remains weak and there are no signs of any important bottom reversals forming at the lows. Immediate resistance is placed around 23,900-24,000 levels. The next lower support is at 23,500, said Nagaraj Shetti of HDFC Securities.

For the last two sessions, the 23,900 mark has acted as a significant resistance, aligning with the 200 DSMA, said Osho Krishnan of Angel One. For the upcoming monthly expiry, Krishnan said the 23,900–24,000 zone remains a critical hurdle, and a break beyond this range is required to spark positive momentum leading into the year-end.

What do the Nifty Bank charts indicate?

On the monthly expiry day, the Nifty Bank index consolidated in the narrow range of 51,382-51,137 throughout the session.

“The daily RSI remains in the oversold zone, indicating the potential for a short-term recovery. On the upside, 51,800 continues to act as a formidable resistance, with a decisive close above this level needed to confirm a strong upward trend. On the downside, immediate support lies at 50,750, and a breach could lead to further weakness. The index appears to be forming coiling inside bar pattern for a decisive breakout, making these levels crucial to watch,” Mehra said.

Here are the stocks to watch ahead of Thursday’s trading session:

– Nalco India signs mining lease deed for amalgmated Utkal-D and Utkal E-Coal block to enhance coal production capacity to 4 MTPA. The lease deed is valid up to April 21, 2051.

– BPCL emerges lowest bidder for 150 MW ISTS-connected Solar PV power project of NTPC. The estimated capital outlay of the project is at ₹756.45 crore. The project is likely to generate annual revenue of ₹100 crore.

– Bharat Forge will infuse €39 million in arm ‘Bharat Forge Global Holding GmbH’.

– ICICI Bank to report Q3 earnings on January 25, 2025.

– Panacea Biotec gets letter of award from UNICEF for supply of 115 m doses of its bivalent oral polio vaccine (bOPV) worth $14.95 m (approx. 127 crore) in FY25.

– Ramky Infrastructure gets letter of acceptance (LoA) for a project worth ₹215.08 cr from Hyderabad Metropolitan Water Supply and Sewerage Board.

– Apollo Hospitals arm ‘Apollo Healthco’ to acquire software business from Searchlight Health for ₹67.5 crore.

– Ceigall India arm signs concession agreement with NHAI for ₹981 crore project.