Updated December 25th, 2023 at 15:07 IST

Nifty faces resistance around 21,500-21,600, F&O expiry to spike volatility

Over the past seven weeks, the Sensex and Nifty have demonstrated impressive gains of 12.65 per cent and 12.07 per cent respectively.

Reported by: Business Desk
For Bank Nifty resistance is evident in 48,000–48,200 zone | Image:Unsplash
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The stock benchmarks snapped their longest winning streak in six years on Friday. Profit booking at record highs earlier in the week contributed to a 0.5 per cent decline for both the NSE Nifty 50 and BSE Sensex over the week, on the back of selloff in recent high-performing sectors such as finance and automobiles.

Over the past seven weeks, the Sensex and Nifty have demonstrated impressive gains of 12.65 per cent and 12.07 per cent respectively, propelled by robust domestic macroeconomic indicators, renewed foreign inflows due to an optimistic US rate outlook and moderation in oil prices.

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“Despite a week marked by increased activity in the IPO market and heightened volatility amid a lack of global cues during the Christmas holiday, the market concluded with marginal declines. Foreign Institutional Investors (FIIs) remained net sellers, divesting over Rs 6,000 crore, while domestic institutional investors provided support with purchases exceeding Rs 9,000 crore. With global cues expected to remain sparse, the upcoming December futures and options expiry could introduce volatility to the market,” said Santosh Meena, head of research at Sawastika Investmart.

“From a technical perspective, the Nifty witnessed profit-taking around the 21,500 mark, filling the gap created post the US Fed policy announcement near the 21,000 level. A breach of the 21,500–21,600 supply zone is crucial for a resurgence of bullish momentum. Market is likely to trade in a band of 20,900–21,600 range,” Meena said.

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“In case of Bank Nifty, resistance is evident in 48,000–48,200 zone, with potential strength anticipated above it in the 48,500–48,800 range. On the downside, a robust demand zone lies within the 47,000–46,800 range,” Meena said.

“Foreign Institutional Investors (FIIs) maintained a long exposure of 65 per cent in index futures, accompanied by a put-call ratio of 1.18, signalling a neutral to positive market sentiment. As the market navigates through limited cues, domestic market dynamics are poised to steer sector- and stock-specific movements in the coming week,” Meena added.

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Published December 25th, 2023 at 15:07 IST