NIFTY NOT READY TO GIVE UP AS BULLS LIKELY TO CONTINUE TO TAKE CONTROL INTO THEIR OWN HANDS

Dated: 14/12/2024

As the prominent week passed by the broader markets are waiting for a meaningful upside from the current levels. Nifty in the hands of the bulls remained incharge of the broader markets with taboo consolidation initially during the whole week combined by high volatility on the last week where a deep strategic bears tried to take things into their own hands but were eventually hunted down by the adamant bulls on the last day of the week itself where a bullish Hammer kind of pattern was formed on Daily & well as Weekly time frame.

As the FII’s remained vigilant so far even in the month of December 2024 Nifty still finding its clear way out from these kinds of volatilities. After 9-10 weeks of mere shredding into the Dalaal Street Nifty finally managed for some upside & with sideways consolidation & some volatilities Nifty finally managed to show its bullish strength. It now denotes that 24000-24200 now remains a crucial support levels on the downside which now can push the Nifty towards our earlier pre-defined levels of 25000-25200 in the coming weeks while major crucial support could be from heavy weights like Reliance Industries, HDFC Bank, PNB & SBI etc.

It’s now been finally 9-10 weeks where both the institutional investors let it be domestic (DII’s) or foreign(FII’s) both remained net buyer’s which now indicates the ball is in the hands of the bull’s now. However, since the beginning of the October 2024 month FII’s have done massive selling amounting to Rs. 1,60,420 crore combined of October & November 2024 series. This has lead the entire pressure on the Indian Domestic Equity Markets overall FII’s have sold nearly Rs. 2,85,452.43 cr. in the Calendar year 2024 while on the contrary DII’s were the main supporters of the entire Indian domestic Equity Markets with whopping buying of Rs. 1,51,738.50 cr. since the beginning of October 2024 & in the Calendar year 2024 they have bought nearly Rs. 4,92,350.40 cr.

The entire structural selling put Nifty into a pressured low of 23264.15 with massive 3013 points fall from the ATH of 26277.35 while the bottom was made somewhere 23264.15. However, this pre-news structured selling seems legit when Q2 GDP data was published last Friday where lower than estimated GDP came as “India’s GDP growth slows in Q2 FY 2024-25 to 5.40% while Fiscal Deficit at 46.50% of FY 2024-25 targets. It now looks like FII’s must have sensed earlier these possibilities of GDP slow down which lead them for a relentless selling. Followed by last week RBI announced its Bi-monthly monetary policy where CRR was reduced by 50bps. Meanwhile following are the key high lights by RBI policy last week:

• Repo rate unchanged at 6.5%

• Monetary policy stance continues to be in Neutral

• GDP growth for FY25 reduced to 6.6% from 7.2%

• GDP Forecast for Q1 FY25 at 6.9% Q2 at 7.2%

• Inflation forecasted to be 4.8% FY25.

• CRR TO 4%

The November series closing have shown good formation on Monthly charts where 23000-23300 now remains a major crucial support for a potential upside which 25000-25200. However, major upside towards 26500-27000 could be seen till the end of January 2025 which instance is expected another ATH in the Nifty.

We have clearly mentioned that the entire expected upmove could be broadly supported by Banking & Financial Services sector followed by “Nifty IT” sector which if holds on the current levels could trigger the potential upside into the broader markets. In some cases Nifty PSU Banks may also outperform & support the broader markets. The broader markets may still follow the same catch up with Banking & Financial Services sector with some focused on Oil & Gas space but “Nifty IT” has tested 45000 & furthermore above those levels our most desirable level & may now show some sideways to profit booking so may not come up to support the major trend in coming weeks but the broader target of 53000 till March 2025 remains intact. Heavy Weights specifically Reliance industries, SBI & PNB are likely to lead the entire potential upmove from here onwards.

However, we have also clearly mentioned the expected potential upside could be supported by the FII’s net longs now stand near to 40-42%  which continuously signifies & has formed the bottom formation somewhere near 23000-23300 which indeed has turned the game & bottom was formed in Nifty. Now we expect the FII’s long positions to rise towards 67% in the coming weeks ahead which may take Nifty & broader markets even on the higher levels.

In the wholesome broader markets witnessed some key events & their outcomes last week which are described as follows:

Domestic News:

• INDIA today is the 5^th largest economy and 4^th largest market after US, CHINA AND JAPAN.

• TCS signs Fives Year deal with Telenor Denmark to deliver IT infrastructure services.

• Waaree forever energies private limited, wholly owned subsidiary of the waaree energies has today received letter of award for the development of 170 MW solar power plant in Madhya Pradesh.

• NESCO Gains on bagging RS 200 CR Hyderabad -Vishakhapatnam Expressway project.

• Zomato receives RS 803 Cr GST notice

• Infosys collaborates with Rhein Energies to help enterprises drive their energy transition and sustainability agenda

• RBI imposes monetary penalty on Ropar central co-operative.

• Vishal mega mart’s USD 944 million IPO fully sold on 2^nd day

• SEBI issued an administrative warning letter to HDFC Bank. 

International

• COCA COLA Sell 40% of HCCBL to Jubilant Bhartia Group.

• SAUDI ARABIA seeks to import 595k tons of wheat.

• ANNUAL INFLATION RATE Accelerate to 2.7% in November

• The US Consumer Price Index (CPI) showed a 12- month inflation rate 2.7% after increasing 0.3% on the month.

• Excluding food and energy costs the core CPI was at 3.3% on annual basis and 0.3% monthly.

• The report further solidified the market outlook for a cut with traders raising the odds to 99% according to the CME Group FED WATCH measure. 

In all these turmoil & bottom formation the one sector which stood tall was “Nifty IT” which remained untouched in last 8 weeks as of now where investors / trades remained into panic with bleeding portfolio but this sector stood tall. It has came to our target zone of 45000 & even surpassed for short term so now for the next 1-2 weeks we remain neutral in this sector while positional view towards 53000 mark till March 2025 remains intact in the second half of the FY 2024-25. In the between the heavy weights like TCS Infosys & Wipro may continue to remain into focus for medium term.

 Advance tax collection in FY till June 15 surged 27.6% to ₹1.48 lakh crore, with ₹1.14 lakh crore as corporate tax and ₹34,362 crore as personal income tax, indicating a strong economy and corporate performance.

The Centre’s gross tax collections (post refunds but before transfers to states), stood at Rs 4.6 trillion in the first two-months of the current financial year, 15.9% higher than the year year-ago level, data released by the Controller General of Accounts (CGA) showed on Friday. This is against 10.6% annual growth pegged in the Budget for FY25.

Net tax revenue (after refunds and after devolution to states) during April-May, stood at Rs 3.19 trillion, accounting for 12% of the Budget estimate of Rs 26.02 trillion. However, during the same period of FY24, net tax revenue had accounted for about 16% of the Budget target.

In the institutional segment the FII’s turned remained neutral with slightly negative data of Rs. 226.7 cr. & so far sold more than Rs. 1.60 Lacs cr. so far since beginning of October 2024 but here DII’s have been the buyer’s with Rs. 2,880.02 cr. last week which helped Nifty to retain the bottom of 24000-24200. FII’s have been brutal but history has shown whenever FII’s have shown merciless selling pressure we somehow make another bottom supported by DII’s massive buying as monthly retail SIP data surpassed Rs.25,000 cr. p.m. 

Nifty last week remained majorly on the sidelines initially but volatility hit on the last trading day where low as well as our crucial support levels of 24000-24200 stood tall & hold back the selling pressure & eventually the bulls emerged & took Nifty towards the Weekly high’s of 24792.30 to give a close at 24768.30 with nominal gain of 90.50 points i.e. 0.36% for the Week. Nifty in the coming week ahead bulls are likely to take the charge & make continue to hold the bottom / crucial support of 24000-24200 with potential pre-defined upside towards 25000-25200 kind of levels while the major upside towards 26500-27000 which is another ATH in Nifty possibly till the end of January 2025. However, the entire follow-up is set for a potential upside the major movement could be supported well by few heavy weights like; Reliance Industries Ltd., HDFC Bank, SBI & PNB etc.

Sensex on the other hand too remained indestructible with crucial support forming & holding up the crucial support levels of 79000-80000 while the gateway for the potential upside still remains 83100 while the potential upside could take Sensex towards another ATH in next 2 months which could be around 86000-87000 kind of levels. However, the entire follow-up is set for a potential upside the major movement could be supported well by few heavy weights like; Reliance Industries Ltd, TCS, SBI & PNB etc.

However, Bank Nifty could remain sideways to slightly positive but major potential upside still remains at 54000-54500 with crucial supports shifting higher within the defined levels of 52000-52800 kind of levels. The broader range could be support by certain heavy weight in PSU heavy weight banks like PNB & SBI etc. & certain private banks like; HDFC Bank.

In Nifty Financial Services the crucial supports now shifted higher within the defined range of 24000-24200 with potential upside till remains at 25200 kinds of levels ahead.

We have clearly mentioned that the entire expected upmove could be broadly supported by Banking & Financial Services sector followed by “Nifty IT” sector which if holds on the current levels could trigger the potential upside into the broader markets. In some cases Nifty PSU Banks may also outperform & support the broader markets. The broader markets may still follow the same catch up with Banking & Financial Services sector with some focused on Oil & Gas space but “Nifty IT” has tested 45000 & furthermore above those levels our most desirable level & may now show some sideways to profit booking so may not come up to support the major trend in coming weeks but the broader target of 53000 till March 2025 remains intact. Heavy Weights specifically Reliance industries, SBI & PNB are likely to lead the entire potential upmove from here onwards.

Till October 2024 the number of Demat Accounts has risen to whopping 20cr. this not only helps the capital markets directly but also directly to Equity investments.

The monthly SIP in Indian markets now raised at Rs. 25,000 cr. per month.

 

Brief Levels of Nifty / Sensex/ Bank Nifty / Nifty Financials / Nifty IT:

Nifty CMP:  24768.30
Nifty Immediate Target: 25000-25200 / 26500-27000 (As the case may be)
Nifty Immediate Crucial Support: 24000-24200 / 23000-23300 (As the case may be)

Sensex CMP: 82133.12
Sensex Immediate Target: 83100 / 86000-87000 (As the case may be)
Sensex Immediate Crucial Support: 79000-80000

Bank Nifty CMP:  53583.80
Bank Nifty Immediate Target: 54000-54500
Bank Nifty Immediate Crucial Support: 52000-52800

Nifty Financial CMP: 24880.40
Nifty Financial Crucial Target: 25200
Nifty Financial Crucial Support: 24000-24200

Nifty IT CMP: 45995.80
Nifty IT Potential Upside: 53000
Nifty IT Crucial Supports: 40000-41500

 

Stock on Radar:

Large Caps:

• IRCTC (CMP 835): This counter has been on correction mode latel along with the broader markets. Looks good to accumulate here at CMP 835 with strict SL placed at 860 with potential upside above 1000 in 2 months time frame.

• NTPC Green (CMP 144): This large cap counter a newly listed entity may not be just done with recent high’s. It has potential to test 200 till December end with crucial SL placed at 120 from CMP 144.

• Reliance (CMP 1272): This large-cap counter has been on our radar since subdued levels of 1265 & from there it has already tested 1330. This counter again giving opportunity at CMP 1272 with broader markets looking bullish this heavy weight giant may continue to rise from here onwards at 1272 the potential upside form here on wards could be around 1600 in the next 3-6mths time frame.

• ITC (CMP 470): Heavyweights in FMCG counter again looks good. ITC can be accumulated here at CMP 470 for a potential upside towards another ATH of 550 in 3 months time frame.

 

Mid- Caps:

• Indigo Paints (CMP 1458): This mid-cap counter looks good here at CMP 1458 with strict SL placed at 1300 one can looks for a potential upside towards 1600 kind of levels in no time.

 

About the Author:

Mr. Vishal Gupta a SEBI Registered Research Analyst is the founder of “VG STOCK RESEARCH”, founder of “THE ANALYSIS ROOM”, a writer & an advisor having rich experience in Indian Equity Markets who has spent years comprehending an industry wide shift and risk management with more than 12+ years exploring in depth analysis of the Equity & Derivatives with accuracy of 90% and above.

He has also been into teaching Fundamental Analysis for quite some time giving investors/traders comprehensive knowledge & skills of Indian Equity Markets.

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