Relief rally likely to continue as market enters holiday mood; 5 things to know before opening bell

Nifty futures on the Singapore Exchange traded 85.5 points, or 0.50 per cent, higher at 17,063.50, signaling that Dalal Street was headed for a positive start on Thursday as well.

Nifty futures on the Singapore Exchange traded 85.5 points, or 0.50 per cent, higher at 17,063.50, signaling that Dalal Street was headed for a positive start on Thursday as well.

Relief rally on Dalal Street continued on Wednesday as Bulls regained control. While S&P BSE Sensex added 611 points or 1.09% to close at 56,930 points, NSE Nifty 50 index rose 184 points to settle at 16,955 after yesterday’s rally. Nifty futures on the Singapore Exchange traded 85.5 points, or 0.50 per cent, higher at 17,063.50, signaling that Dalal Street was headed for a positive start on Thursday as well. “The relief rally might continue for some time as market enters into a holiday mood. However volatility cannot be ruled out on account of potential risk from Omicron variant and fragile global cues. We suggest long term investors to take benefit of such volatility in the market and add on to their portfolios gradually at lower levels. Overall Selling pressure is intact at higher levels and any recovery or bounce is being used by traders to sell in the market”, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Global cues

US stock markets on Wednesday closed higher ahead of the Christmas holiday. Major indices – S&P 500, the Nasdaq, and the Dow Jones Industrial Average – recovered all the losses of this week. The rally was mainly led by tech and retail companies. The S&P 500 rose 47.33 points, or 1%, to 4,696.56. The Dow Jones Industrial Average rose 261.19 points, or 0.7%, to 35,753.89m and the Nasdaq rose 180.81 points, or 1.2%, to 15,521.89. The Russell 2000 index of smaller companies rose 18.96 points, or 0.9%, to 2,221.90.

European equities gained on Wednesday, with markets optimistic that Omicron variant would only have a limited economic fallout, even as global cases surged and more countries announced restrictions. Europe’s STOXX 600 rose 0.77 per cent and London’s FTSE 100 index climbed 0.61 per cent. In Asia, Tokyo stocks opened higher on Thursday as investors took heart from gains on Wall Street for a second straight session following strong US consumer data. The benchmark Nikkei 225 index was up 0.50 percent or 143.11 points at 28,705.32 in early trade, while the broader Topix index rose 0.50 percent or 9.95 points to 1,981.46. Hong Kong’s Hang Seng index lagged the broader region, slipping 0.1%. Mainland Chinese stocks were higher, with the Shanghai composite up nearly 0.1% while the Shenzhen component climbed 0.256%.

Key support and resistance levels

At present, Nifty has support at 16,750 levels while immediate hurdle at around 17,000 levels, crossing above the same can show 17,200-17,300 levels, which may act as resistance zone. On the other hand, Bank nifty has support at 34,600 levels while resistance at 35,500 levels, said Sachin Gupta, AVP, Research, Choice Broking.

Technical view

After showing upmove with high volatility on Tuesday, Nifty showed a sustainable follow-through upmove on Wednesday and closed the day higher by 184 points. After opening with an upside gap of 95 points, the market shifted into a gradual upmove for the better part of the session. The upside momentum got strengthened in the afternoon to later part of the session and Nifty finally closed near the highs. The opening upside gap remains unfilled. A reasonable long bull candle was formed on the daily chart with gap up opening (back to back second opening upside gap which remains unfilled). This pattern indicate a continuation of pullback rally in the market post sharp decline, said Nagaraj Shetti, Technical Research  Analyst, HDFC Securities.

The Nifty is currently placed at the crucial overhead resistance of 17000-17200 levels and the negative chart pattern of lower highs and lower lows remains intact. Present upmove is in line with the formation of lower top of the pattern. But, there is no confirmation of any lower top reversal yet at the highs. The negative chart pattern is still intact in Nifty as per smaller to larger timeframe charts. After breaking below the important weekly lower support of ascending trend line at 16700 levels in the early part of this week, the market has bounced back from the lows and regained the lost support area as of now. Hence, further weakness below 16700 could mean emergence of  next round of weakness in the market, he added.

The pullback rally continued in the market and the Nifty is now entering a crucial overhead resistance of around 17000-17200 levels. There is a higher chances that Nifty could reverse down from near this area in the next few sessions. Immediate support is placed at 16830 levels, Shetti said.

Stocks under F&O ban on NSE

Escorts, Indiabulls Housing Finance, Vodafone Idea, and Zee Entertainment Enterprises are the stocks under the F&O ban for Thursday (December 23). 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

MedPlus listing: Medplus Health Services shares will debut on the stock exchanges today. Medplus Health’s Rs 1,398 crore IPO was subscribed a total of 52.59 times by investors earlier this month. Qualified Institutional Buyers had bid for the IPO 111.9 times while NII subscription after the tree day initial share sale stood at 85.33 times. Retail investors had subscribed to the issue 5.24 times. Shares of Medplus Health Services were offered to investors in a fixed price band of Rs 780-796 per share.

Supriya Lifescience IPO share allotment: The finalization of basis of share allotment of Supriya Lifescience IPO is expected to take place on Thursday, 23 December. The three-day initial public offering (IPO) of Supriya Lifescience Limited was subscribed 71.51 times on the last day of share sale on Monday, 20 December. The price range for the offer was fixed at Rs 265-274 per share. The initial share sale received bids for 1,03,89,57,138 shares against 1,45,28,299 shares on offer. The category for non-institutional investors was subscribed 161.22 times while that for Retail Individual Investors (RIIs) by 56.01 times and the Qualified Institutional Buyers’ (QIBs) quota by 31.83 times. 

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