More highs bring more profit booking

The oil and gas, realty and utilities indices were the day’s biggest losers. Analysts believe that the markets could stay range-bound in the same manner till next week as they have entered the overbought condition and may experience a consolidation.

NSE‘s Nifty fell 90.70 points or 0.43% to close at 20,906.40, and BSE’s Sensex declined 377.5 points or 0.54% to end at 69,551.03.

Earlier in the day, both Sensex and Nifty had touched their lifetime high levels before a dip was seen.

“The markets are experiencing a time-based consolidation after the huge rally seen in the aftermath of the state elections and may trade in the range of 20,700-21,100 for the current and the upcoming week,” said Apurva Sheth, head of research at Samco Securities. “In the previous week, the markets traded outside their 2-standard deviation band due to which we saw a sideways trade which will continue till the end of this week.”

As the Nifty has achieved its 1,000-point rally from 20,000 to 21,000 in just six trading sessions, analysts believe a further upside will take more time and no sharp moves can be expected for now. “The consolidation is at the psychological level of 21,000 where the markets are taking a breather from the quick 1,000-point rally,” said Dharmesh Shah, head of technicals at ICICIDirect. “We are seeing profit booking at higher levels.”

However, other factors may impact prices in the upcoming days.”Currently, we do not see a lot of local factors affecting the market, except the upcoming results season in January 2024. The agricultural yield might also impact the movement as we saw a ‘not ideal’ monsoon this year,” said Kumar Manish, head of research at BOB Capital Markets. “The consumption figures post-festive season will also be important.”

The US Federal Reserve is also scheduled to have its policy meeting and release the outcomes on its inflation numbers and rate trajectory on December 13. However, Sheth believes it would be a ‘non-event’; having no effects on the Indian equity markets.

On Tuesday, Nifty’s Volatility Index or VIX fell almost 0.4% to 12.71, indicating that the concerns around market volatility are going down.

“As the FIIs go on leave at the end of December, we can expect to see large drops in trading volume,” said Sheth.

Shah expects 20,600 to be Nifty’s crucial support level where traders should be buying on dips, and 21,100 as the resistance level.

The Nifty Midcap 150 dropped 0.42% and the Nifty Smallcap 250 fell 0.12%.

Foreign portfolio investors net purchased shares worth ₹76.86 crore, while domestic institutions were buyers to the tune of ₹1,923.32 crore.

Elsewhere in Asia, the Shanghai index advanced 0.4%, Hong Kong’s rose 1.07%, South Korea gained 0.39% and Taiwan’s index rose 0.19%.