IGI Logo

Below the Quote on Weekly Note by Mr. Ajit Mishra - SVP, Research, Religare Broking Ltd

The markets witnessed consolidation last week, gaining nearly 1%, as the Nifty and Sensex closed at 23,813.40 and 78,699.07, respectively. Trading sentiment remained subdued due to persistent selling by FIIs and muted global cues amid the onset of the year-end festive season, which limited recovery. Sectoral performance was mixed, with pharma, auto, and FMCG sectors showing resilience, while metals lagged behind. Broader indices, including midcap and smallcap segments, ended almost unchanged, reflecting cautious participation. 

As we step into the new calendar year and month, auto sales data will be closely monitored for initial market cues. In the absence of any significant events, attention is likely to shift toward FII flows and currency movement, especially as the rupee continues to weaken against the US dollar. These factors could play a crucial role in shaping market direction in the near term. 

On the technical front, Nifty is striving to hold its critical long-term moving average (200 DEMA), but pressure from heavyweight stocks is capping any meaningful recovery. A decisive breach below the recent swing low of 23,500 could intensify selling pressure, with the next major support level near November’s low of 23,263.15. On the upside, the 24,100–24,400 zone remains a key resistance area, requiring strong momentum to overcome. 

Amid mixed signals from the indices, some sectors continue to offer opportunities. Pharma and healthcare remain outperformers, while selective recoveries in FMCG, banking, and realty stocks provide potential buying opportunities. However, PSU and metal sectors appear vulnerable to further downside, warranting cautious handling. 

In light of this, traders are advised to adopt a balanced approach, aligning their strategies with market conditions. A focus on fundamentally strong stocks is crucial, particularly in the midcap and smallcap spaces, which remain volatile. Diversifying across outperforming sectors while avoiding vulnerable areas can help manage risks and optimize returns in this consolidating market phase.

Above views are of the author and not of the website kindly read disclaimer