Trade Setup Monday: Key Factors To Drive Sensex, Nifty Today; IPOs Trend, FIIs Flow In Focus

The Nifty 50 has soared to new heights, gaining nearly 700 points in the last three weeks and marking a seven-week winning streak. The rally, which began in late October, has seen the index accumulate a substantial 2,500 points, fueled by a surge in IT stocks and robust foreign funds flow.

Last week witnessed a substantial boost from the Information Technology sector, with the Nifty IT index surging 7.2%, its best weekly performance in three years. This two-day rally was a significant contributor to Nifty's overall gains, with leading IT giants such as HCL Tech, Infosys, TCS, Persistent, and Coforge driving the bullish sentiment. The Nifty's Friday close at 21,456.65, up by 273.95 points, and the Sensex hit a new lifetime high of 71,605.76, reflecting the market's buoyant mood.

Asian shares slid ahead of the Bank of Japan's policy decision, tracking the uncertain closure of US shares. Last week, the global market witnessed a spur due to the hope of rate cuts, dovish remarks from the Fed, and positive economic data. At home, a flurry of IPOs and robust foreign funds flow propelled both Sensex and Nifty to unprecedented levels.

For Monday, Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects the Nifty spot index to find support to 21,300/21,250 and resistence is seen around 21,600/21,650. While Bank Nifty is expected to find support around 47,800/47,750 and resistance around 48,700/48,750.

Koothupalakkal recommended buying in three stocks on December 18th. These are:
- BUY IOB at 44.50 stoploss 43 Target 48
- BUY ASIAN PAINTS at 3313.90 stop loss 3260 Target 3430
- BUY IOC at 124.55 stoploss 122 Target 132

Dr Joseph Thomas, Head of Research, Emkay Wealth Management said, "We believe the broader markets continue to remain strong as seen by the $2.5bn MTD buying by the FII on the back of another $2.3b in November. The state elections gave a big boost to the market going into the central elections. In the near term as we head into the year-end we should expect some consolidation around the current levels."

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "We could see a breather in the index after the recent surge and expect to hold the 21,000-21,200 zone in case of any dip. Much on the expected lines, banking and IT majors are among the top contributors in the present leg of up move and we believe their outperformance could continue. Participants should align their trades accordingly and avoid contrarian positions.

On Nifty, Rupak De, Senior Technical analyst at LKP Securities said, the Nifty's upward momentum persists with the bulls maintaining control in the market. Achieving a new all-time high, the index has marked its seventh consecutive weekly gain. The prevailing sentiment appears strongly in favour of the bulls, as indicated by the absence of any reversal signals on the technical charts. Resistance is observed at 21,500, while a potential further rally in the Nifty could occur upon breaching this level. Support is currently positioned at 21,300.

While on Bank Nifty, Kunal Shah, Senior Technical & Derivative analyst at LKP Securities said, the Bank Nifty bulls maintain their robust momentum, pushing the index beyond the 48000 level. The overall market sentiment remains bullish, supported by a strong base at 47500. Any retracements towards this support level are seen as buying opportunities. The upside potential for the index is projected to reach 50000, indicating continued optimism among market participants.

The Futures and Options (F&O) market indicates a positive outlook, with Nifty 50's December futures trading at a premium. Several stocks, including Zee Entertainment, Mazagon Dock Shipbuilders, Vedanta, and Tata Power, are in focus for various reasons, such as mergers, contracts, dividends, and patent grants.

Globally, the S&P 500 has experienced its longest winning streak since 2017, with steady gains for the month. However, the bond market sees shifts, with the 10-year Treasury yield dropping to 3.905%. In the Asia-Pacific region, markets display mixed sentiments, reacting to the Bank of Japan's policy decisions and global economic factors.

As the week unfolds, investors and traders brace for a dynamic market, closely monitoring local and global developments for potential opportunities and risks. The Nifty's performance, coupled with positive cues from the IT and banking sectors, sets the stage for an intriguing week ahead.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.