Trade Setup: Market Continues The Bull Run, Nifty To Break Above 21,300

The Nifty 50 struggled to regain its footing after a midweek plunge, showcasing a one-third recovery in the wake of the weekly options expiry. While Thursday's rebound brought a semblance of normalcy, the Nifty faces a precarious situation, with its seven-week record-breaking run on the line.

Despite the valiant effort to bounce back, the Nifty 50 remains in the red for the week, needing a decisive close above the critical level of 20,455 to secure an eighth consecutive weekly advance. The index's fate hinges on the resilience of key players, particularly Reliance and HDFC Bank, which accounted for a staggering 80% of Thursday's recovery.

The technical landscape is being closely scrutinized as market observers compare Wednesday's high to Thursday's low, plotting a 61.8% retracement line that sets the next resistance for the Nifty at 21,360, a formidable 100 points above Thursday's closing levels.

HDFC Bank's steadfast performance played a pivotal role in aiding the Nifty Bank index to recoup the majority of Wednesday's losses. However, with resistance looming around the 48,000 mark, the Nifty Bank is grappling to secure a positive weekly close, down 0.6% and requiring a final push above 48,150 for its fifth straight weekly advance.

The derivatives market offers mixed signals, with Nifty 50's December futures witnessing an 8.1% reduction in Open Interest, now trading at a premium of 95.35 points. In contrast, Nifty Bank's December futures saw a significant 37% reduction in Open Interest. The Put-Call Ratio for Nifty 50 rebounded, standing at 1.11, signalling a shift in market sentiment.

In the futures and options arena, Hindustan Copper reenters the ban list, while NALCO, Piramal Enterprises, and Indus Towers exit. Notable stocks like Ashok Leyland, India Cements, Manappuram Finance, SAIL, Balrampur Chini, Delta Corp, and RBL Bank remain under the ban.

Looking ahead to the final expiry of the year on December 28, the Nifty 50 Call strikes between 21,500 and 22,500 have experienced increased Open Interest, with the 22,000 strike seeing the maximum addition. Traders are positioning themselves for potential volatility as the year draws to a close.

Several stocks are poised for attention in the upcoming trading session:
LIC was granted a one-time exemption by the Department of Economic Affairs to achieve a 25% minimum shareholding by May 2032. Allcargo Logistics announces a scheme of arrangement, demerging the International Supply Chain business into a separate entity.

Tata Motors receives No Objection Certification for the cancellation of DVR shares. GMR Airports is set to receive a Rs 675 crore investment from the National Infrastructure Investment Fund (NIIF).

Zomato denies acquisition rumours, affirming focus on existing business. Lupin launches Softovac Liquifibre, a liquid laxative. Kaynes Technology approves the allocation of equity shares as part of the QIP, raising Rs 1,400 crore.

KPI Green approves the closure of QIP at a 5% discount on the floor price. Tata Metaliks obtains NCLT approval for the scheme of amalgamation with Tata Steel. Madras Fertilisers resumes operations at a plant following a shutdown due to Cyclone Michaung.

GR Infra settles arbitral award worth Rs 41.38 crore with NHAI under the Vivad Se Vishwas II scheme. Angel One to consider a dividend proposal at its board meeting on January 15, 2024. RailTel secures a Rs 66.83 crore work order from NF Railway Construction for tunnel communication system installation.

In the broader context, Asia-Pacific markets gained momentum heading into the Christmas weekend. Japan's Nikkei 225 rebounded after underperforming, and South Korea's Kospi and Kosdaq both experienced positive movements. Hang Seng's futures, however, hinted at a subdued start.

Meanwhile, US markets staged a recovery overnight, with the S&P 500 gaining 1% after its worst day since September. The Dow Jones and Nasdaq also ended higher, by 0.9% and 1.3%, respectively.

As markets brace for the year-end, investors are closely monitoring developments in the Nifty 50 and associated stocks, anticipating the final twists and turns of a volatile year in the financial landscape.