Trade setup for December 24: Nifty takes a breather before resuming uptrend

Following a sharp rally over the last two sessions, the Nifty paused on the weekly expiry day and traded in a narrow range.

The index ended marginally higher, gaining 5 points to close at 26,177.

The Nifty opened on a positive note but spent most of the session moving within a tight range. Mild selling pressure was seeing towards the close, leaving the index to finish flat to slightly positive, still below the 26,200 mark.

Within the Nifty pack, Coal India, Shriram Finance, ITC and UltraTech Cement outperformed, while Infosys, Bharti Airtel, Adani Ports and Sun Pharma faced selling pressure.

Sectoral performance was mixed. Media, metal and FMCG stocks led the gains, while information technology, PSU banks and pharma stocks saw the most weakness.

Broader markets largely mirrored the benchmark. The Nifty Midcap index ended flat, while the Nifty Smallcap index rose 0.37%.

The Indian rupee closed flat for the second consecutive session, as year end rebalancing flows offset intraday weakness.

On the policy front, sentiment received support after India announced the conclusion of a free trade agreement with New Zealand.

The pact allows duty free entry of Indian goods into New Zealand and includes a planned investment inflow of $20 billion over the next 15 years.

Looking ahead, markets will track key global economic data, including the US durable goods orders and gross domestic product numbers later today, followed by initial jobless claims tomorrow.

Siddhartha Khemka of Motilal Oswal expects trading volumes to remain subdued during the holiday shortened week, with markets likely to consolidate at higher levels, supported by favourable global cues.

Nagaraj Shetti of HDFC Securities said the underlying trend for the Nifty remains positive and the index could resume its uptrend after one or two sessions of consolidation.

Immediate support is seen at 26,050, while the next upside levels are placed around 26,300 to 26,400.

Rupak De of LKP Securities said that the Nifty continues to move higher, indicating improving bullish sentiment in the short term.

He said the trend remains favourable as long as the index holds above 25,900, with 26,315 acting as immediate resistance.

Nandish Shah of HDFC Securities added that the Nifty could extend its up move towards resistance levels at 26,202 and 26,330, while 26,000 is expected to act as a key near term support.