Trade Setup for January 3: Experts suggest the gradual uptick in the market to continue

The bulls made a strong comeback on Dalal Street, continuing the New Year celebrations for the second day in a row. The Nifty Index surged past its critical 200-Day Moving Average (DMA) during Thursday's session, marking a significant breakout after several unsuccessful attempts in recent sessions. The 200 DMA has historically been a crucial level for market reversals, often acting as strong support for upward moves.

Market Highlights:

The Nifty rose nearly 500 points, breaking key milestones at 23,800, 24,000, 24,100, and 24,200. This marked the index's biggest single-day gain in the past six weeks, with the last such move occurring on November 22, 2024.

The index surpassed both its 20-Day and 50-Day Moving Averages, signaling bullish momentum. It closed 425 points higher at 24,168, breaching both the 24,000 and 24,200 resistance levels.

Despite losses in Asian markets, Indian stocks rallied, driven by strong performances in financial, auto, and IT sectors. These sectors are expected to lead the market ahead of the upcoming earnings season.

The broader market, including the Nifty Midcap 100 (+1.1%) and Smallcap 100 (+0.6%), outperformed large-cap stocks.

Auto stocks, particularly in the passenger vehicle and tractor segments, saw a 20% YoY growth in December 2024 dispatches, exceeding expectations.

Eicher Motors, known for Royal Enfield motorcycles, saw its shares surge by 9%, closing at a record high, following a strong 25% YoY growth in sales, surpassing analyst expectations.

What’s Ahead?

Investors are closely watching the pre-quarterly business updates over the next few days, as these will provide insight into the upcoming earnings season. Experts suggest that the gradual uptick in the market will continue, supported by strong domestic sectors and global cues, as foreign markets reopen after the year-end holidays. Both foreign and domestic institutions were net buyers in the cash market on Thursday.

Nifty50 Outlook:

According to Nagaraj Shetti of HDFC Securities, the short-term trend remains strong on the upside, with the next hurdle at 24,400. Any dips could find support at around 23,900.

Om Mehra from SAMCO Securities believes that a breakout above 24,280 could push the index towards 24,500. Support is now at 23,900, creating a solid base for pullbacks.

Rupak De from LKP Securities sees the Nifty as a 'buy on dips' candidate. He expects further movement toward 24,500, with strong support at 24,000.

Nifty Bank Outlook:

The Nifty Bank closed at 51,606, gaining 1.07%, after breaking through its consolidation phase. The index surpassed resistance at 51,500, reclaiming its 9 DMA, which signals a positive development. Analysts anticipate a sharp recovery if the index moves above 51,800, with momentum indicators adding to the optimism. The Nifty Bank could see upside toward 52,100–52,500, with support at 51,100.

F&O Cues:

Stocks with fresh long positions (price increase and Open Interest rise):

Eicher Motors (+8.83%, OI +24.32%)

Maruti Suzuki (+5.50%, OI +18.27%)

Oil India (+6.38%, OI +15.84%)

Bajaj Finserv (+7.58%, OI +13.84%)

PB Fintech (+3.65%, OI +13.37%)

Stocks with fresh short positions (price decrease and Open Interest rise):

Union Bank (-1.13%, OI +25.01%)

SJVN (-1.63%, OI +24.22%)

Petronet LNG (-5.75%, OI +23.11%)

Angel One (-1.64%, OI +9.09%)

Adani Total Gas (-1.84%, OI +6.61%)

Stocks to Watch:

Biocon's arm, Biocon Pharma, received approval for Tacrolimus capsules from China's NMPA.

NHPC Ltd. received ₹250 crore under a mega insurance policy following the flash flood at Teesta-V Power Station.

Pricol's board approved the divestment of its wiping business to Auto Ignition.

Arun Krishnamurthi resigned as MD and CEO of Axiscades Technologies.

Avenue Supermarts reported Q3 FY25 revenue of ₹15,565.23 crore, a YoY increase from ₹13,247.33 crore, with 387 stores as of December 31, 2024.

Varun Beverages invested ₹413 crore in its South African arm, The Beverage Company Proprietary.

Disclaimer: The views and tips expressed by investment experts are their own. Always consult certified experts before making investment decisions.