Trade Setup for December 23: Nifty aims to move back to record highs amidst lack of directional cues

Market began the week on a strong footing and ended at the day's high, with the Nifty holding above 26,150 as 40 stocks closed in the green.

Tracking firm global cues, the Nifty opened with a 90-point gap-up and extended gains through the session. The benchmark finally settled 206 points higher at 26,172, marking its highest closing level since December 5.

The index saw a decisive breakout from its recent consolidation phase on Monday. After the strong opening, the Nifty moved higher in early trade before shifting into a narrow range with a positive bias during the middle and latter part of the session.

Within the Nifty pack, Trent, Shriram Finance, Wipro, and Infosys were among the top gainers, while HDFC Life, Tata Consumer, SBI, and Kotak Bank witnessed selling pressure, ending the day as key laggards.

Baring Nifty consumer durables, all the Sectoral indices ended in the green. The rally was most pronounced in the IT, Metal and Auto sectors, which emerged as the day's top performing sectors.

The broader market extended its outperformance, with the Nifty Midcap 100 advancing 0.84% and the Nifty Smallcap index rising 1.17%.

On the macro front, investors will track the UK Q3 GDP data due later on Monday, followed by the US Q3 GDP and Consumer Confidence data on Tuesday.

Overall, Siddhartha Khemka expects markets to remain steady, backed by broad-based buying interest and favourable global cues.

According to Nagaraj Shetti of HDFC Securities, the recent price action signals a decisive breakout above the crucial 26,000 level. He said this is a positive development and reflects a major change in the market's trend on the upside.

The next resistance levels to watch are in the 26,300-26,400 zone in the near term, while immediate support is placed at 26,000.

LKP Securities' Rupak De said the Nifty continues to move higher, indicating improving bullish sentiment in the short term. He added that the positive momentum is likely to favour the bulls as long as the index stays above 25,900, making a buy-on-dips strategy favourable.

Nandish Shah of HDFC Securities said the Nifty could now extend its rise towards the next resistance levels at 26,202 and 26,330. On the downside, the 26,000 mark is expected to act as a near-term support.

Looking ahead, the Nifty is likely to extend its northward journey over the next couple of trading sessions, according to Sudeep Shah of SBI Securities.

The SBI Securities analyst sees an upside target of 26,420 in the short term, while the 20-day EMA zone of 26,000-25,950 is expected to act as a crucial support area.