Relief rally likely to continue amid positive global cues, 5 things to know before opening bell

The rally is likely to continue in week’s last trading session amid postive global cues. SGX Nifty was up in the green hinting at positive start for Indian equities.

The relief rally might continue for some more time (File Photo Pixabay)

Bulls on Dalal street seem to have entered holiday mood as benchmark indices extended gains on Thursday. S&P BSE Sensex gained 384 points or 0.68% to close at 57,315 while NSE Nifty 50 rose 117 points or 0.69% to settle at 17,072 yesterday. The rally is likely to continue in week’s last trading session amid postive global cues. SGX Nifty was up in the green hinting at positive start for Indian equities. The relief rally might continue for some more time. FII selling has reduced sharply over the last few days as they enter into holiday mood. However, volatility cannot be ruled out on account of potential risk from Omicron variant and fragile global cues, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Global cues

All three main Wall Street indexes posted solid gains for a third straight session on Thursday, with the S&P 500 marking a record-high close. Stocks ended the holiday-shortened week on a positive note, lifting sentiment heading into Christmas and new year. Gains were broad among S&P 500 sectors, led by consumer discretionary and industrials, which both rose about 1.2%. The Dow Jones Industrial Average rose 196.67 points, or 0.55%, to 35,950.56, the S&P 500 gained 29.23 points, or 0.62%, to 4,725.79 while the Nasdaq Composite rose 131.48 points, or 0.85%, to 15,653.37.

Europe shares rose on Thursday as markets globally rallied after two research studies states that Omicron was less severe compared with the Delta coronavirus variant, lifting investor sentiment. London’s blue-chip FTSE 100 index gained 0.43%, extending its two-day rally, while the pan-European STOXX 600 index jumped 1%. Asian markets were trading higher today as Chinese and Hong Kong shares showed gains. The Shanghai Composite is up 0.40% while the Hang Seng is up 0.07%. Japan’s Nikkei 225 and South Korea’s KOSPI, and KOSDAQ were also up in the green on Friday.

Key resistance, support levels for Nifty

Nifty may again oprn higher due to global cues but chances are good that we may see followup buying at higher level. 17,150-17,200 should act as resistance zone and risk reward remains good in this zone for shorts. Support are placed at 17,020 and 16,970, said Rahul Sharma, Director & Head – Research, JM Financial Services Ltd.

Technical view

The upside momentum continued in the market for the third consecutive sessions on Thursday and Nifty closed the day higher by 117 points amidst a range movement. After opening with an upside gap of 111 points, the market made an attempt to move up in the early part of the session. It later shifted into a narrow intraday range movement for the remaining part and finally closed near the highs. The opening upside gap remains unfilled. A small positive candle was formed on the daily chart with minor upper and lower shadow. Technically, this pattern indicate a formation of doji or spinning top type candle pattern at the highs. Normally, formation of such patterns after a reasonable upmove or at the important hurdle could act as a reversal pattern post confirmation, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Nifty is currently placed at the crucial hurdle of 17150-17200 levels (ascending trend line as per the concept of change in polarity). The negative chart pattern of lower tops and lower bottoms remains intact and Nifty is now placed to form a new lower top of the sequence. Confirmation of weakness needed to call this as a lower top reversal. A formation of three back to back opening upside gaps is observed in the last three sessions, which are unfilled or partially filled. More often, trend gets reversed and the gaps are filled soon after the third gap formation. Hence, the bulls needs to be cautious at the higher levels. The short term trend of Nifty continues to be positive. But, the market is currently placed at the crucial overhead resistance around 17100-17200 levels. The overall chart pattern indicate higher possibility of selling emerging from near the resistance band in the next 1-2 sessions, he added.

Stocks under F&O ban on NSE

Escorts, Indiabulls Housing Finance, Vodafone Idea, and Zee Entertainment Enterprises are thr stocks under F&O ban for Friday (December 24). Securities in the ban period under the F&O segment include companies in which the security has crossed 95 percent of the market-wide position limit.

IPO Watch

Data Patterns Lisitng: Shares of Data Patterns will debut on the stock exchanges today. The Rs 588 crore IPO of the company was heavily oversubscribed earlier this month. The public issue was subscribed a total of 119.62 times led by Non-institutional Investors (NII) who subscribed their portion 254 times the quota. Qualified Institutional Buyers (QIB) had bid 191 times while retail portion was subscribed 23 times. Shares of Data Patterns were offered to investors in a fixed price band of Rs 555-585 per share, in a bid lot of 25 equity shares.

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