It’s better to book profits in mkt wherever possible

Positive signals

• VIX down by 4.21% to 14.50
• Jan-March quarter remains bearish historically
• Good buying opportunities likely
• Wait for a flat base formation

The frontline indices snapped their five-day rally. Nifty closed at 21731.40 with a decline of 47.30 points or 0.22 per cent. The Auto and the MNC indices were the top gainers, with over one per cent. The FMCG, Midcap, Realty Metals and Small indices gained over half a per cent. The CPSE, Energy, PSU Bank, and PSE indices declined by over 0.50 per cent. The India VIX is down by 4.21 per cent to 14.50. The market breadth is positive with 1367 advances and 1155 declines. About 190 stocks hit a new 52-week high, and 103 stocks traded in the upper circuit. Tata Motors, Idea, HDFC Bank, and IRFC were the top trading counters on Friday in terms of value.

The Nifty ended the year with an indecisive candle. It gained 20.06 per cent in 2023 and registered its successive positive year. The highest gain was in 2021, which gained 24.12 per cent. Normally, the Jan-March quarter is bearish historically. For the last five years, all January months, the index closed negatively. So, expect profit booking in the near term.

On the last trading session of the year, the index formed a Doji candle and closed with a tiny loss. Expect a reasonable counter-trend consolidation if Thursday's high is not taken out in the next two-three days. The index almost filled the previous day's gap. The 20DMA is vertically moving higher, and the flattening upper Bollinger band suggest that consolidation is imminent. The volumes were lower but above average. If the Nifty sustains below 21801, the RSI will form a negative divergence. The momentum is clearly waning with Thursday's move. The 15.73 per cent vertical rally in 43 days needs consolidation. It is better to book profits wherever possible. We may get good buying opportunities in the consolidation period. Wait for a flat base formation.