The S&P BSE Sensex settled at 78,699, up by 226.6 factors or 0.29%, whereas the broader Nifty 50 index closed at 23,813.40, increased by 63.20 factors or 0.27%.
Analyst Rahul Ghose, Founding father of Hedged.in, interacted with ET Markets relating to the outlook on Nifty and Financial institution Nifty together with the important thing ranges on the index. Following are the edited excerpts from his chat:
With the Nifty ending the week close to the 23,800 stage, what are the quick help and resistance zones for the approaching week?
The weekly December closing fashioned a impartial candle, signaling indecisiveness between patrons and sellers. That is typical for the tip of December, as market exercise tends to decelerate as a result of vacation season. For the brief time period, the market’s help is seen across the 23,200–23,300 vary. There’s a small pro-gap on this space, the place an honest bounce was seen in November 2024. Nevertheless, on condition that costs didn’t make a big upward transfer from this help stage, the bounce is anticipated to be short-lived, with a excessive probability of additional declines in direction of the subsequent help ranges of twenty-two,900–22,600.On the upside, the 24,500–25,000 vary is recognized as a robust resistance zone. The 25,000 stage is especially necessary as a result of giant open curiosity (OI) constructed up in name choices, suggesting that the index is unlikely to breach this stage within the close to time period.
What’s your view on the index’s battle with the 200-day transferring common in figuring out its near-term development?
It’s clearly a detrimental signal. In latest situations, every time the indices have approached the 200 DMA, they’ve staged a robust bounce again. That is what is anticipated from a wholesome market. Nevertheless, the value motion surrounding the 200 DMA lately has been characterised by impartial to indecisive candles.This, coupled with the truth that RSI ranges are hovering round 34–35, additional suggests {that a} decisive break under the 200-day transferring common is probably going.Observe that Reliance Industries (RIL), which has the best weightage within the Nifty index, is nicely under the 200 DMA. The vast majority of Nifty 50 constituents are additionally buying and selling under the 200 DMA. HDFC Financial institution and choose IT shares have helped hold the index afloat in the previous few buying and selling periods.The index can’t maintain a rally primarily based on just some names. Broad participation is important.
Is Financial institution Nifty a greater guess, being positioned above the 200 DEMA? What development do you foresee?
Financial institution Nifty is afloat primarily as a result of outperformance of HDFC Financial institution. The remainder of the banks, resembling SBI, Axis Financial institution, IndusInd Financial institution, and lots of others, are in a robust downtrend and are additionally buying and selling nicely under the 200 DMA. Eventually, even Financial institution Nifty would possibly give means. Technically, a break under the 49,600 stage is prone to set off a pointy downfall for Financial institution Nifty.
FIIs have proven constant promoting strain lately, even amidst skinny volumes. How would possibly this development affect market sentiment, and which sectors are prone to bear the brunt of this promoting?
FIIs have closely offered in three main sectors: Oil & Fuel (near Rs 5,300 crore), Auto (near Rs 1,800 crore), and FMCG (round Rs 1,600 crore).
These three sectors are prone to stay beneath strain. FMCG might even see some help at decrease ranges, given the standard of firms on this sector and the truth that many shares are already down 30–40% from their highs. This sector can be prone to be the quickest to get well when situations enhance.
Nevertheless, Auto and Oil & Fuel sectors would possibly expertise additional promoting earlier than issues return to normalcy. For instance, within the Oil & Fuel sector, ONGC and Oil are forming sturdy bearish patterns on each month-to-month and quarterly charts.
What does the December-to-January sequence rollover information counsel about merchants’ expectations? Are increased brief positions being carried ahead?
Rollover information from December to January signifies cautious optimism, with marginally increased brief positions being carried ahead. This means that merchants are hedging their positions in opposition to potential draw back dangers, reflecting uncertainty within the near-term outlook. A pickup in rollovers at increased open curiosity ranges would sign renewed confidence, however that has but to be noticed.
Are there any sectors or shares which are well-suited for taking positions primarily based on the rollover information?
The rollover information suggests power in sectors like prescription drugs, the place positions are being carried ahead with a optimistic bias. Shares resembling Solar Pharma and Lupin seem well-placed technically, providing alternatives for merchants and buyers alike. Some banking shares, notably personal banks, are additionally seeing wholesome rollovers, indicating potential for additional upside. Within the banking sector, HDFC Financial institution and ICICI Financial institution look sturdy.
What’s the sentiment for the January sequence, contemplating the technical and spinoff indicators?
The sentiment for the January sequence seems cautiously optimistic. Key spinoff indicators just like the put-call ratio (PCR) and the volatility index (VIX) counsel that the markets are unlikely to expertise excessive volatility. Nevertheless, the upside is prone to be capped until there’s a significant restoration in FII inflows and world cues flip favorable. The January sequence would possibly lean in direction of a consolidation part, with stock-specific motion dominating. Moreover, merchants and buyers might be looking ahead to Trump’s quick actions when he takes cost on January twentieth.
Are we prone to see a restoration or additional consolidation within the early weeks of 2025?
The early weeks of 2025 could witness additional consolidation as markets digest world macroeconomic developments and Q3 earnings. A restoration is probably going if there’s readability on world uncertainties, resembling U.S. Fed coverage or China’s development trajectory. Home elements, resembling price range expectations and constant DII inflows, might present extra help. If we take a look at historical past, it turns into clear that markets have a tendency to maneuver in cycles. We noticed a robust rally in Nifty from 2012-2016, adopted by consolidation for one yr (2016-2020) earlier than COVID struck.
From 2020-2021, Nifty moved from 7,500 to 18,000, adopted by one other yr of consolidation. In the same sample, a transfer from 15,500 in September 2022 to 26,000 in September 2024 is prone to be adopted by a yr of consolidation. In spite of everything, if one has to go far, they should catch their breath to journey the space. 2025 would possibly very nicely be that yr of catching the breath.
Do you see any world uncertainties nonetheless weighing closely on the Indian markets? What are your expectations from the Q3 earnings?
World uncertainties, such because the U.S. Federal Reserve’s rate of interest trajectory, geopolitical tensions, and China’s financial restoration, Trump insurance policies proceed to weigh on Indian markets. So far as Q3 earnings are involved analysts count on sequential income development for India Inc within the December quarter, led by improved rural demand and an uptick in authorities spending, moreover supported by the pageant season.
Nevertheless, headwinds resembling uneven city demand and evolving world uncertainties might weigh on development within the second half of the fiscal yr. On stability, it’s anticipated that the working revenue margin (OPM) for India Inc will enhance within the coming quarters.
Do you suggest any shares and sectors which are nicely poised for the upcoming yr?
2025 might be a yr of selective inventory choosing, not like earlier years the place virtually every thing rallied. Particularly in 2025, we count on the pharma as a sector to do nicely & one can hold an in depth watch on Lupin, Cipla, Dr. Reddy and IT shares like main IT bellwether firms ( TCS, Wipro, HCL Tech, Infy) & choose midcap IT shares. Your entire IT pack is prone to profit positively from the AI growth which is able to solely get stronger with the brand new management within the US.
(Disclaimer: Suggestions, solutions, views, and opinions given by consultants are their very own. These don’t characterize the views of The Financial Instances)
