NIFTY OUTLOOK FOR 27 DECEMBER 2024

Market Analysis Report: December 26, 2024

Overview of Market Performance

The Indian benchmark indices concluded on a flat note in a volatile trading session on December 26. The BSE Sensex ended marginally lower by 0.39 points at 78,472, while the NSE Nifty gained 22.55 points, to close at 23,750.

On the final expiry day of the year, the domestic market exhibited a lackluster performance, influenced by holiday closures in global peer markets and the absence of significant domestic or international triggers. Gains in the auto sector, following recent corrections, were counterbalanced by concerns over Foreign Institutional Investor (FII) outflows and a depreciating rupee. These factors were fueled by the strengthening US dollar index and apprehensions about potential adverse tariffs and rate cut concerns for 2025.

Key Observations and Trends

1. Nifty’s Performance:

   • The Nifty index traded within a narrow range of 300 points during the week.

   • The index struggled to break above the 23,870 level while maintaining support near 23,600 over the past three sessions.

   • This tussle between bullish and bearish forces resulted in multiple Doji candles and inside bars on the daily chart, signaling market indecision.

2. Technical Indicators:

   • The Nifty is currently hovering near its 200-day Exponential Moving Average (EMA).

   • It remains below its short-term moving averages, indicating potential bearish sentiment.

   • On the weekly chart, a Doji candle formation suggests support-based buying but points to limited upside potential.

3. FII Activity:

   • Persistent FII selling pressure is evident, with the Long-Short ratio declining to 23%.

   • This trend reflects cautious investor sentiment amidst global and domestic uncertainties.

Market Projections

• Support and Resistance Levels:

  • As long as the Nifty remains above the 23,500 zone, the index may see swings toward the 23,900-24,000 range.

  • Downside support is strong around 23,600, with a broader trading range projected between 23,200 and 24,200.

• Option Data Insights:

  • Maximum Call Open Interest (OI): 24,000 followed by 25,000 strike levels.

  • Maximum Put OI: 23,800 followed by 23,000 strike levels.

  • Call writing: Observed at 23,800 and 24,000 strikes.

  • Put writing: Concentrated at 23,800 and 23,000 strikes.

  This data suggests an immediate trading range of 23,500-23,900, with a broader outlook of 23,200-24,200.

Sectoral Highlights

• Auto Sector: Gained traction following recent corrections, signaling renewed buying interest.

• Currency and Macro Factors: Concerns over a depreciating rupee and strengthening US dollar index remain significant headwinds. Potential adverse tariffs and rate cut uncertainties for 2025 continue to weigh on market sentiment.

Conclusion

The Indian equity market remains in a consolidation phase with no clear directional bias. Key levels for the Nifty index and evolving macroeconomic factors will likely shape short-term market trends. Investors are advised to remain cautious, focusing on technical levels and sector-specific opportunities while keeping a close watch on global cues and FII activity.