Sensex Down 502 Points, Nifty at 24,198; Tomorrow Nifty Prediction
Tomorrow Nifty Prediction
Nifty Closes Below 24,200: What to Expect from the Market on December 19
Market Overview: On December 18, 2024, the Indian stock market extended its recent decline for the third consecutive session, with investors maintaining a cautious stance ahead of the critical U.S. Federal Reserve (Fed) interest rate decision expected later that evening.
The Nifty and Sensex, India’s benchmark indices, closed firmly in the red as profit-booking and uncertainty about global monetary policy weighed on investor sentiment.
The Nifty slipped below the 24,200 mark, raising concerns among market participants about further downside risk in the near term.
At the close of trading, the Sensex was down 502.25 points (0.62%), finishing at 80,182.20, while the Nifty shed 137.15 points (0.56%), settling at 24,198.85.
This continued decline followed a sharp recovery in the market earlier in the month, prompting traders to take profits after a significant 6-7% rally from the November 21 lows.
Sector-wise, Pharma emerged as a rare bright spot, gaining 1%, while all other major sectors ended in the red, including Auto, Energy, PSU Banks, Metals, Media, and Realty, which saw losses ranging from 0.5% to 2%.
As traders and investors anxiously awaited the Fed’s decision on interest rates, the broader market sentiment remained subdued.
The mid-cap and small-cap indices also followed the downtrend, falling by 0.64% and 0.87%, respectively, further underscoring the market’s vulnerability to external triggers like the global monetary policy stance.
Sectoral Performance
The Pharma sector was the only major sector to post a gain, with stocks such as Dr. Reddy’s Laboratories, Cipla, and Sun Pharma standing out as the top gainers.
This was likely driven by continued investor interest in defensive sectors amid heightened volatility in other parts of the market.
In contrast, sectors that are sensitive to economic cycles, like Auto, Metals, and Energy, faced heavy selling pressure.
The auto sector, in particular, saw a significant drop as rising oil prices and global growth concerns dampened sentiment.
Among individual stocks, Trent, Dr. Reddy’s Laboratories, Cipla, Wipro, and Bajaj Auto were the top gainers on the Nifty, with these stocks benefiting from defensive positioning or sector-specific positive developments.
On the flip side, Tata Motors, Bharat Electronics, Power Grid Corporation, JSW Steel, and NTPC were the biggest losers, reflecting broader risk-off sentiment across sectors that are vulnerable to global economic shifts.
Technical Analysis
From a technical perspective, Aditya Gaggar, Director at Progressive Shares, noted that while the Nifty witnessed a sharp early-session decline, it largely remained within a narrow range for the rest of the day.
This lack of strong follow-through in selling could indicate a potential for a short-term bounce. However, the formation of a bearish candle on the daily chart suggests that the immediate bias remains on the downside.
Despite this, Gaggar pointed out that the Nifty has entered the oversold zone, implying that a bounce is now due, and traders should be on the lookout for signs of stabilization near key support levels.
He identified 24,100 as the immediate support level, while 24,370 serves as the resistance level that could act as a short-term barrier for any upside recovery.
Market Sentiment and Key Drivers
The recent decline in the Indian market can largely be attributed to profit booking following a strong 6-7% recovery from the November lows.
Kunal Rambhia, Fund Manager and Trading Strategist at The Streets, highlighted that corrections like this are normal after such sharp rallies, especially ahead of significant global economic events like the U.S. Federal Reserve’s interest rate decision.
These types of corrections often represent a 40% retracement of the preceding rally, and thus, the pullback observed in the Indian market may be part of a broader consolidation phase.
The Fed’s monetary policy decisions have historically been market movers, and with the current global economic uncertainty, traders are looking for any signals from the Fed regarding future rate hikes or dovishness that could impact global liquidity and capital flows.
If the Fed adopts a more hawkish stance, it could lead to further risk-off sentiment in global markets, which could weigh heavily on emerging markets like India.
Profit Booking and Market Prediction
Kranti Bathini, Director at Wealthmills Securities, echoed similar views, attributing the recent weakness in the Indian markets to profit-booking and cautious investor sentiment ahead of the Fed’s decision.
Bathini particularly stressed the significance of the 24,000 level for the Nifty, noting that this level would act as a critical support zone for the index in the near term.
He mentioned that as long as the Nifty stays above this key level, the bullish medium-term outlook for the market remains intact.
However, should the index breach this level decisively, further downside risk could materialize, with the next support levels likely around 23,800 to 23,600.
Bathini suggested that short-term investors should exercise caution and consider tightening stop losses in light of the current volatility.
On the other hand, long-term investors with a 3-6 month horizon may view the ongoing correction as an opportunity to accumulate quality Indian equities at attractive valuations.
According to Bathini, India’s medium-term outlook remains favorable, driven by structural growth drivers such as strong domestic consumption, increasing foreign direct investment, and a favorable demographic profile.
Key Levels to Watch:
- Immediate Support: 24,100
- Immediate Resistance: 24,370
- Critical Support Zone: 24,000 (closely watch this level for signs of potential trend reversal)
Final Remarks
The Indian stock market is navigating through a period of heightened volatility, driven by global factors such as the U.S. Federal Reserve’s interest rate decision and profit-booking after a strong rally.
As we move into December 19, the Nifty’s immediate levels to watch are 24,100 on the downside and 24,370 on the upside.
Given the current oversold conditions, the market could see a short-term rebound, but broader risk factors—particularly from global monetary policy—will continue to play a critical role in shaping market direction.
Investors should be prepared for potential swings in the market, especially as the Fed’s stance on interest rates becomes clearer.
While short-term traders may need to remain cautious and protect profits, medium- to long-term investors with a positive view on India’s growth story might find this correction an opportune moment to build positions in fundamentally strong stocks.
Maintaining a close eye on support levels like 24,000 and exercising disciplined risk management will be key to navigating the volatile landscape in the coming sessions.
