Trade Setup for December 10: Nifty direction rests on global cues, broader market volatility ahead of Fed meet

The Nifty slipped for a second straight session on Tuesday, extending its decline during the weekly expiry before recovering sharply from the day's lows.

The index opened 93 points lower and fell another 139 points to hit an intraday low of 25,728.

After 10 am, the Nifty rebounded nearly 195 points, though a mild pullback post 2 pm trimmed some of those gains. It eventually closed at 25,840, down 121 points but well off the lows.

The broader market mood remained weak, but the index managed to hold above the 25,800 mark. Among Nifty constituents, Eternal, Titan and Adani Enterprises were the top gainers, while Asian Paints, Tech Mahindra and HCL Tech saw notable selling.

Sectoral trends were mixed. Consumer Durables, PSU Banks and Realty indices ended higher, while Auto, Pharma and Healthcare declined.

The Nifty Midcap 100 recovered almost 2% from the day's low to end with gains of 0.3%. The Nifty Smallcap index snapped a five-session losing streak with a strong intraday rebound of more than 2.5%, closing over 1% higher.

Investors now await key global data, including the US JOLTS job openings and China's CPI print. However, the US Federal Reserve's interest rate decision tomorrow remains the biggest trigger for global markets.

Motilal Oswal's Siddhartha Khemka expects the headline indices to stay range bound in the near term, with stock-specific moves dominating and broader market recovery likely to continue. Global cues and the Fed's message will drive direction from here.

HDFC Securities' Nagaraj Shetti said the Nifty trend remains weak, but a sustained bounce from the crucial 25,700 support could unlock upside towards 26,100 to 26,200. Immediate support is at 25,700.

Centrum Broking's Nilesh Jain said that the Nifty has broken down from a rising wedge pattern, putting stiff resistance at 26,000, which also aligns with the 21-DMA. He pegged the next major support at the 50-DMA near 25,670 and said the overall setup looks sideways. Jain advised caution as long as the index remains below 26,000.

LKP Securities' Rupak De said sentiment is likely to stay weak in the short term as the Nifty trades below the 21EMA, with a possible drift towards 25,615 and 25,535. He sees resistance at 25,970 to 26,000.

HDFC Securities' Nandish Shah said resistance lies in the 25,950 to 26,000 zone, followed by a stronger barrier at 26,202. He added that today's low of 25,728 will act as a key near-term support.

Bank Nifty slipped below its 20-day EMA at the open but managed to close above it. SBI Securities' Sudeep Shah said support for the index lies between 58,900 and 58,800, while the 59,600 to 59,700 band will act as the upper hurdle.