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Below is quote on Domestic cues may dominate at the beginning of New Year By Mr. Santosh Meena, Head of Research, Swastika Investmart Ltd.

It was a good week for the bulls where Nifty and Sensex manage to clock more than 2% gain amid low volume. The market will have a lack of global cues next week and volumes will be on the lower side where domestic cues may dominate. On the domestic front, monthly auto sales numbers will be an important trigger that may lead to stock-specific movement whereas the market will have an eye on Covid cases and fresh restrictions.

If we look at the data then FIIs are still net sellers however selling has come down whereas DIIs are continuously supporting the market. It will be interesting to see how institutional investors will approach the market in the new year.

If we look at the derivative data then FIIs' long exposure in the index future stands at 68% whereas the put-call ratio is sitting at 1.41 level that indicates a positive bias.  If we look at the OI built up then put writers are looking confident in 17200-17300 area while there is no major built up in call option side till 18000.

Technically, Nifty is showing strength with morning star candlestick formation on the weekly chart which is a bullish reversal signal however 17400-17500 is a critical resistance zone because 100 and 50-DMA along with down sloping trend line resistance falling in this area; above this, previous swing high of 17640 will be the next critical hurdle therefore 17400-17640 is the most important resistance zone; above this, we can expect a big rally in the Nifty towards 18000 level. On the downside, 20-DMA of 17150 is acting as a strong support level; below this, we can expect any weakness towards the 17000-16950 zone.

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