Trade Setup for December 6: Can Nifty traders digest the volatility enroute to 25,000?

Markets including Nifty and Sensex are showing further recovery and have gained more than 1% following a brief pause. After a restrained beginning, mid-session sentiment was lifted by a sudden rise in select heavy-weight stocks. However, the final hour momentum was tempered by volatile swings. Ultimately, Nifty has marked its highest closing level since October 21, ending above 24,700.

Among other sectors in the Indian Share market, banking, IT and auto have contributed the most to the rally. The IT index has gained over 2% with TCS and Infosys leading the gains, hitting a record high.

Uncertain MCP’s policy meeting as well as the RBI’s focus on liquidity measures has induced market volatility. Although banking and IT are driving the index higher, contributions from other sectors are crucial to extending this rally.

Nifty 50 ended at 24,708.40, gaining 0.98% after hitting the daily high of 24,857.75, showing a strong recovery.

A long-legged bullish candle is formed in the ‘Nifty 50’ chart that indicates strong buying momentum, turning the previous resistance into strong support at 24,500 levels, said Om Mehra of SAMCO Securities.

The trend will possibly remain positive in the short-term, as long as it continues above 24,300. The index can move on the higher side, towards 25,000 in the coming term, said Rupak De of LKP Securities.

The Nifty Bank gained 0.63%, and ended at 53,603.55, plotting a higher high and higher low structure on the daily chart.

After a long consolidation, the index has given a breakout above 52,800, confirming the primary bullish trend. The daily RSI is above 65 which indicate strong momentum, Mehra said.

Trade setup

Afcons Infrastructure finishes the longest tunnelling drive in Delhi Metro Phase-4. Afcons infra share price is standing at Rs 525.95.

A partnership happens between Ramco Systems and Hanjin Information Systems and Telecommunication.

Some other stocks to follow include Ola Electric, Nykaa, Cummins India, and Dr Reddy’s Laboratories.