By Ajit Mishra

Markets ended a 7-week long gaining streak and settled with a cut of half a percent.  The beginning was subdued however profit taking in the middle followed by recovery in the final sessions kept the traders on their toes. 

Eventually, both the benchmark indices, Nifty and Sensex, settled with a modest cut to close at 21,349.40 and 71,106.96 levels respectively. We saw the change on the sectoral front as defensive viz. FMCG and Pharma took the front seat while others witnessed profit taking.

 The broader indices also experienced volatile swings and finally settled lower in the range of 0.3%-1.1%. The coming week is a holiday-shortened one and we expect volatility to remain high due to the scheduled expiry of December month derivative contracts. 

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At the same time, we expect muted action from the global indices. The Dow Jones Industrial Average (DJIA) is also seeing some profit taking around its record high but expected to maintain the positive tone. We reiterate our positional target of 39,000 for the index and the 36,300-36,600 zone would act as a buying zone in case of any dip. 

We are eyeing further consolidation in the Nifty index amid mixed signals and the range could be broader now citing recent swings. A decisive close above 21,500 would pave the way for the 22,150 level and expect the 20700-21000 zone to offer a cushion in case the profit taking resumes. 

Participants should prefer index majors over the midcap and smallcap counters and focus more on FMCG, pharma and IT basket for long trades. Besides, we have identified a few stocks from the derivatives pack that look promising for long trades.

Nifty (CMP: 21349.40) – We are eyeing further consolidation in the Nifty index amid mixed signals and the range could be broader now citing recent swings. A decisive close above 21,500 would pave the way for the 22,150 level and expect the 20700-21000 zone to offer a cushion in case the profit taking resumes.

Bank Nifty (CMP: 47,491.85) – The banking index is also seeing choppiness around its record high zone, mainly due to the mixed action within the private banking space. And, indications are in favor of prevailing consolidation to continue but the bias would remain on the positive side. We expect up trend to resume above 48,200 and then gradually towards the psychological mark of 50,000 levels. In case of any dip, the 46,000-46,650 zone would act as a strong cushion. Traders should stay selective and limit aggressive trades.

Stocks to Watch

Bullish– Aartiind, Apollohosp, Chambalfert, Cipla, Deepakntr, Glenmark, ITC, Hindunilvr, Voltas
Bearish– ABFRL,Escorts, Deltacorp, M&M Fin, Marico, SBI Card

(Ajit Mishra, SVP- Technical Research, Religare Broking. Views expressed are author’s own. Please consult your financial advisor before investing.)