Trade Setup for December 2: Nifty holds key support levels but rupee, IIP may dampen weekly expiry

The Nifty hit a fresh record high in early trade but slipped below the 26,200 mark by the close as profit-booking emerged at higher levels.

The index consolidated for the third straight session and ended with a marginal loss of 27 points at 26,175. With the day's open and high remaining the same, the session reflected clear dominance of bears.

Nifty opened nearly 100 points higher and touched an all time high of 26,325, but it failed to hold on to those gains and saw a sharp 200 point intraday reversal.

All four frontline indices made record highs at the open, but the market soon came under selling pressure and erased most of the gains.

Within the Nifty basket, UltraTech Cement, Tata Motors and Maruti Suzuki outperformed, while Max Healthcare, InterGlobe Aviation and Bajaj Finance faced strong selling.

Auto, metal and IT indices closed in the green, whereas realty, healthcare and consumer durables ended lower. Broader markets were mixed: the Nifty Midcap 100 finished flat and the Nifty Smallcap 100 inched up about 0.25%.

On the macro front, the Indian rupee weakened for the fourth straight session and hit a fresh record low against the US dollar. A wider trade deficit, delays in the India US trade agreement and limited central bank intervention pushed the currency down by about 10 paise to close at 89.56.

Investors now await global cues, including manufacturing PMI data from the Eurozone, US and UK today, followed by Eurozone CPI and US JOLTS data tomorrow.

Analysts expect near term consolidation as the market looks for clarity on the rate cut path and progress on trade negotiations. Siddhartha Khemk of Motilal Oswal said the market may remain range-bound in the immediate term.

Despite the intraday correction, Nifty managed to close above the 5 DEMA support near 26,150. The broader trend stays bullish with strong support at 26,000 to 26,050, while 26,300 remains a key resistance, said Vinay Rajani of HDFC Securities.

Nilesh Jain of Centrum Broking expects a pause in the uptrend with scope for consolidation. He sees immediate support at 26,120 and then 26,000, while a move above 26,300 could open the path towards 26,450.

Jain added that chasing the index at elevated levels is not advisable and traders should wait for a pullback.

Vatsal Bhuva of LKP Securities said Monday marked the third straight weak close for Nifty and indicates ongoing consolidation at higher levels. Heavy call writing at 26,200 and 26,300 points to a sideways bias with a mild negative undertone. He pegs immediate support at 26,100 and resistance at 26,300, with positional support at 26,000.