By Ravi Singh
Benchmark indices are expected to trade on a negative sideways note on the last expiry of 2024, influenced by global market weakness and concerns over India’s CPI inflation rate.
Last week, the Nifty index dropped nearly 5% but opened on a positive note this week after testing its support level of 23,500. However, given the overall market sentiment and current trends, the outlook for Nifty this week remains sideways to negative, with potential risks of further declines if a key support level of 23550 fails to hold. In the derivatives market, the Nifty weekly options for January 2nd show notable open interest at the 25,000 CE and 23,000 PE strikes, with approximately 1.6 million contracts at the 25,000 CE and around 1.3 million contracts at the 23,000 PE.
From a liquidity perspective, FIIs have been net sellers in the cash market, with a total of ₹3,461 crore sold in December. The Federal Reserve reduced interest rates by 0.25% on December 18, but a further cut is unlikely in its next policy decision on January 29, as high U.S. consumer inflation and low unemployment rates reduce the need for urgent rate cuts.
In line with the benchmark, Bank Nifty also started the week on a positive note. However, we maintain a negative outlook for the index, with 50,800 as a key support level. A decisive close below this level could trigger further declines towards 50200-49800. While for further upside index needs to give a clear breakout above the level of 52000 below this level one needs to maintain ‘’Sell on Rise.”
Key Levels to Watch:
•Nifty: As long as the index trades between 23400-24400 on a spot basis, the bias remains “sideways to negative,” and a neutral strategy is recommended for the upcoming monthly expiry of December. A major hurdle for further upside is expected to be in the range of 24000-24250, with strong support likely around the 23450-23200 levels.
•Bank Nifty: Immediate support is seen around 50,800-50,500, while strong resistance lies in the 51,800-52,200 range. The index is expected to trade within a broader range of 50500-52300 during this week.
Strategy for the week: Nifty Short Strangle
Buy Nifty 1 lot * 23850 Put @ 80
Sell Nifty 2 lots* 23650 Put @ 24
Spread 32 Stoploss 0 Target 66,
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