20,000 Loading for Nifty? - Post-Market Analysis

NIFTY started the day flat at 19,674. After initially falling to the previous swing levels of 19,630, there was no looking back! The index rallied nearly 250 points, moving from the intraday low of 19,627 to 19,875 levels. Even though the index tried to take resistance at 19,700 and 19,800 along the way, it consistently moved up. In the final 30 mins of trading, there was a notable decline of 150 points— bringing the index down to 19,725 levels. Nifty closed at 19,765, up by 89 points or 0.46%.

BANK NIFTY (BNF) started the day at 44,251 with a gap-up of 50 points. After consolidating within yesterday's range until 11:00 AM, the index experienced a breakout, surging over 100 points to reach 44,400 levels. However, it faced resistance, leading to a decline. Despite attempting to return to those levels, the index faced rejection for the second time, resulting in a sharp drop of over 350 points in just 30 minutes. BNF closed at 44,161, down by 40 points or 0.09%.

All indices except Nifty PSU Bank (-0.24%) and Nifty FMCG (-0.15%) closed flat-to-green. Nifty IT (+2.69%) moved up the most.

Major Asian markets closed well in the red. European markets are currently trading mixed.

Today’s Moves

Hero MotoCorp (+3.2%) was NIFTY50’s top gainer. The two-wheeler maker marked its highest-ever festive retail sales, surpassing the 14 lakh unit mark.

Alok Industries (+9.79%) surged on the back of strong volumes.

Coforge (+6.7%), Mphasis (+4.23%), TCS (+2.7%), TechM (+2.8%), and other IT stocks rallied for the second day in a row, supported by softer-than-expected inflation data in the US. 

PowerGrid (-1.45%) was NIFTY50’s top loser. The stock turned ex-dividend today.

Kalyan Jewellers (-4.94%) fell sharply after brokerage firm ICICI Securities downgraded the stock from 'Buy' to 'Add'.

Markets Ahead

Nifty was on steroids and moved with a lot of strength! As discussed in yesterday’s post-market report, Indian markets have turned bullish and buying on dips would be an ideal strategy. As we highlighted, focusing on long-side trades in Nifty was a wise move, given the index's potential for upward movement. This strategy has proven to be effective in today's market session.

Both indices experienced a significant drop in the last half-hour of trading. Whether this is merely profit booking or an indication of more incoming declines remains to be seen.

Nifty: The immediate resistance to watch out for is 19,800. A breakout from there could give us targets of 19,870 (today’s high) and 19,910. Meanwhile, the support can be seen near 19,700 levels (the earlier resistance now acting as support). A breakdown from there may give us targets of 19,635 and 19,500 eventually.

Bank Nifty: There is clear resistance near 44,400 levels. A breakout from there may take the index up to 44,500. The major support to look out for is the 44,000 round levels. A breakdown could give us targets of 43,800 and 43,700.

Bank Nifty is looking weaker than Nifty. If there’s a flat or gap-down opening tomorrow, considering short trades in both indices could be a strategic move. On the other hand, if there's a minor correction following a big upward rally and the index opens flat and moves upward, planning buy-in-dips trades might be a suitable approach.

Being Nifty expiry today, option sellers would have been in trouble as CE premiums were seeing gamma spikes. Option premiums were very erratic, and the last 150-point fall created panic for PE sellers as well.

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