Trade Setup for December 19: Is there a silver lining amidst the Fed's outcome?
image for illustrative purpose
The Nifty has faced a tough battle over the last few days, with the index trying to defend its lower levels after a sharp pullback last Friday. The previous resistance level at 25,000 is now a distant memory as the Nifty fights to maintain crucial support levels. On Wednesday, the index dropped below last Friday’s low of 24,190, touching 24,150 before a narrow recovery allowed it to close just above 24,190.
The Nifty is down 550 points in the past three sessions, with Wednesday's decline contributing an additional 140 points. While the broader markets had shown resilience in recent weeks, they also saw pressure, with most Midcap 100 and Smallcap 100 stocks ending in the red.
The focus now shifts to the US Federal Reserve's upcoming interest rate decision. The market anticipates a 25 bps rate cut, but the real attention will be on the Fed’s future rate projections. How the FOMC’s statement impacts US markets, particularly the Dow Jones, will likely influence global sentiment.
Moreover, Thursday marks the weekly options expiry, and recent weeks have seen significant volatility around this time, which could add to market fluctuations.
Key Levels to Watch:
Support: 24,000 – 23,900
Resistance: 24,400, with a broader uptrend resuming only above 24,750.
Rajesh Bhosale from Angel One sees 24,000 as the critical support for the Nifty, with immediate resistance at 24,400. A break below 24,150 could signal a further decline towards 24,000.
In the Nifty Bank index, a dramatic 1,400-point drop in the last two sessions has pushed it below the 52,000 mark. The 52,500 level will act as a strong barrier, with support seen at 51,680, corresponding to the 100-Day Exponential Moving Average. A further decline below 51,700 could push the Nifty Bank to 51,270 levels.
F&O Cues:
Fresh Longs: Supreme Industries, Indraprastha Gas, Coromandel International, Prestige Estates, Marico.
Fresh Shorts: IPCA Laboratories, NMDC, Federal Bank, Adani Green Energy, SJVN.
Long Unwinding: Chambal Fertilisers, PVRINOX, HUDCO.
Stocks to Watch:
Asian Paints: Two top executives have resigned, which could impact the stock’s performance.
DOMS Industries: F.I.L.A is selling a 3.05% stake via block deals, with an upsize option available.
Yatharth Hospitals: Launching a QIP to raise up to ₹700 crore.
Lupin: Receives USFDA approval for a generic version of Descovy tablets.
Borosil Renewables: Announces production expansion and withdraws a proposed rights issue.
The Nifty’s immediate movement will depend heavily on key levels, external global cues, and market reactions to the Fed’s decision. Traders should keep an eye on 24,000 and 24,400 as pivotal levels for short-term direction.
