The last week of 2023 is likely to remain volatile, said analysts. Settlement in the derivative segment this week and portfolio reallocation by institution investors ahead of the new year will keep the market active and volatile, they said. NSE monthly (December) contracts are expiring this Thursday. However, they further said that support from foreign institutional investors will keep the market buoyant.
Ruchit Jain, Lead Research, 5paisa.com, said: FIIs have consistently formed long positions in the derivatives segment in this series, which is a positive sign. It would be crucial to see the quantum of long rollover by them to the January series in the coming week.
“Certain sectors, such as I.T. and selective pharma stocks, can buck the trend and provide good trading opportunities for the short term. Hence, traders are advised to trade with a stock specific approach and trade with proper risk management,” Jain added.
Gift Nifty at 21,420 signals a flat trade as Nifty December futures on Friday closed at 21402 and January futures at 21555. Analysts expect trading to remain low-key due to a lack of global cues, as they are closed due to Christmas.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “FPI inflows which were negative in the previous three months have sharply turned positive in December. So far, the total FPI inflows in December is ₹57,313 crore, including the buying through stock exchanges and primary market.
The steady decline in U.S. bond yields has caused this sudden change in the strategy of FPIs, who were big buyers in financial services besides autos, capital goods and telecom, said VK Vijayakumar.
“Since 2024 is expected to witness further declines in U.S. interest rates, FPIs are likely to increase their purchases in 2024 too,” he added.
According to technical analysts, the market will remain volatile in the short term.
Technically, the short-term texture of the market is volatile; hence, level-based trading would be the ideal strategy for day traders, said Amol Athawale, Vice President - Technical Research at Kotak Securities. “We are of the view that as long as the index is trading above 21200/70700, the pullback formation is likely to continue. Above the same, the market could move up till 21500-21550/71500-71650. On the flip side, below 21200/70700 the sentiment could change. Below the same, the market could retest the level of 21100-21000/70400-70000, he added.
For Bank Nifty, 47000 could act as a sacrosanct support zone and rally till 48000-48300. However, below 47000, the uptrend would be vulnerable. Below which, it could slip till 46700-46500, Amol Athawale said.