Trade Setup Tuesday: Key Factors To Influence Indian Market Today; Nifty Index Support Levels Today

Indian market is likely to witness cautious betting in the opening bell of Tuesday due to mixed global cues. In the early trade, the Gift Nifty was in green, while Asian shares edged higher after opening mixed as investors await a crucial inflation report later this week which will give more clarity on the US Federal Reserve's interest rates action in December policy. On the other hand, US stocks slipped as investors showed lacklustre demand after the Thanksgiving pause as the holiday shopping season kicked off. In the previous session, Sensex and Nifty were in red, but with fractional downside.

Nifty who has shown hesitation towards crossing 19,850 levels and maintaining it, will require to break out for fresh upsides. If it declines below 19,700 on Tuesday, more correction may follow suit, however, reaching near 19,900 levels could lead to a substantial rally.

In the previous trading sessions, the market ended in red with Sensex down by 47.77 points or 0.072% to 65,970.04, and Nifty lower by 7.30 points or 0.037% to 19,794.70. However, in the trading week between November 20th to November 24th, Sensex and Nifty gained by 274.80 points and 62.70 points overall respectively.

IPOs were at the centre of attention last week. The primary market was flooded with IPOs which witnessed record-breaking responses from investors across categories. A staggering Rs 2.6 lakh crore was pumped into five firms that looked to raise about Rs 7,379 crore through an initial public offering. These IPOs were -- Tata Technologies, Flair Writing Industries, Fedbank Financial, Gandhar Oil Refinery, and the Indian Renewable Energy Development Agency (IREDA). There was also an SME IPO of Rockingdeals Circular Economy which received stellar demand as well.

Vinod Nair, Head of Research at Geojit Financial Services said, "Domestic indices traded within a range throughout the week with a positive bias. The Fed reserve adopted a cautious stance and the muted trend in European and German markets was also echoed in domestic markets. Declining inflation and recent cooling job data in the US, along with easing US bond yields, attracted foreign funds to the emerging market."

Nair added, "the broader Indian market experienced some profit booking as investor attention shifted to the primary market, marked by a set of IPOs scheduled for the week. Sectors such as consumer durables and realty took the lead, driven by a strong rebound in festive demand. However, the IT sector showed subdued performance in response to weak global data. Despite the RBI's scrutiny of unsecured lending by NBFCs, the banking index demonstrated resilience this week."

He also said that while the US manufacturing PMI data for November is expected to be below forecast, summarizing caution in the short-term.

Meanwhile, for Tuesday, Prashanth Tapse, Senior VP (Research), Mehta Equities believes technically, Nifty needs to reclaim the 19889 mark to see any fresh upside, while the index has support at the 19471 level.

Furthermore, on Nifty, Rupak De, Senior Technical analyst at LKP Securities said, "The Nifty has encountered difficulty surpassing the resistance range of 19850-19900. On the downside, 19700 has held as a near-term support level. As long as there's no breakout, the index is expected to continue moving sideways. A decline below 19700 could potentially trigger a market correction. Conversely, a clear move above 19900 might prompt a significant rally, potentially driving the index towards a new all-time high."

In the case of Bank Nifty, Rupak De also said, following RBI's tightening measures, the Bank Nifty has consolidated at lower levels, with four of the five largest banks dropping below their 200DMA. The sentiment appears sideways in the short term. The level of 44000 is poised to remain a pivotal point; a decisive move above this mark could potentially trigger a substantial rally for the index. On the downside, visible support resides around 43500.

To traders, Ajit Mishra, SVP - Technical Research, Religare Broking said, "It is a healthy consolidation in the Nifty so far and we feel only a decisive gap-up move above 19,850 could pave the way for a new high else range bound bias would continue. Participants should keep a close watch on the US markets and the performance of the banking majors for cues. Meanwhile, stay selective and avoid contrarian trades."

On the global front, in the early trade, Sanjiv Basin, Director at IIFL Securities pointed out that Asian markets opened mixed with the ASX & South Korean indices seeing gains of nearly 0.5-1% while the Japanese 'Nikkei' traded lower by 60 points in early trade. Most Asian stocks look set for a bounce as lower inflation & weakness in US$ & bonds bode well for Asian stocks.

Further, Basin said, US markets start the week on a quiet note as the extended long holiday weekend sees volumes on the lower side. Dow Jones closes lower by 56 while Nasdaq closes unchanged. Bond yields slip further to close near 4.38%, while the US$ sees its lowest close in over 4 months at 103.

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