Trade Setup for December 6: The Indian stock markets witnessed a sharp recovery today, December 6, with the Nifty 50 and Sensex gaining over 1% following a subdued start. Mid-session buying in select heavyweight stocks lifted the sentiment, driving indices to significant gains. However, the final hour saw some volatility, which slightly tempered the momentum.
The Nifty 50 surged to close at 24,708.40, a 0.98% gain, marking its highest level since October 21. The index hit an intraday high of 24,857.75, showcasing strong recovery. Similarly, the Sensex mirrored the trend, with banking, IT, and auto sectors being the key contributors to the rally.
Sectoral Highlights
IT Sector Steals the Show
The IT index soared over 2%, with industry giants like TCS and Infosys leading the gains. Both stocks touched record highs, bolstering the market sentiment.
Banking Sector Momentum
The Nifty Bank climbed 0.63%, ending at 53,603.55. The index showcased a higher high and higher low structure on the daily chart, signaling a bullish trend. This breakout above the critical 52,800 level suggests strong momentum, with the RSI above 65 further confirming the upward trajectory.
Auto Sector Joins the Rally
The auto sector also contributed significantly, with notable gains in stocks like Bajaj Auto and Hero MotoCorp, further fueling the market’s recovery.
Technical Analysis
A long-legged bullish candle formed on the Nifty 50 chart, indicating robust buying interest. According to Om Mehra from SAMCO Securities, the earlier resistance at 24,500 has now turned into strong support. As long as the index stays above 24,300, the trend remains positive, with the potential to move toward 25,000 in the near term.
Rupak De from LKP Securities echoed this sentiment, emphasizing the bullish outlook as long as the index maintains its current levels.
Key Developments and Stock Movements
1. Afcons Infrastructure
Afcons Infrastructure completed the longest tunneling drive for Delhi Metro Phase-4, a significant milestone. Its stock price stood at ₹525.95, reflecting steady investor interest.
2. Ramco Systems
In a strategic move, Ramco Systems partnered with Hanjin Information Systems and Telecommunication, a development expected to open new growth avenues for the company.
3. Stocks to Watch
Other stocks making headlines include:
- Ola Electric: Continuing its expansion in the EV market.
- Nykaa: Shares saw mixed sentiment following the recent resignation of its CEO.
- Cummins India: Showcasing steady performance amidst market volatility.
- Dr. Reddy’s Laboratories: Maintaining strong momentum in the pharma sector.
Market Outlook
While the day’s gains provide optimism, uncertainty surrounding MCP’s policy meeting and the RBI’s focus on liquidity measures continue to influence market volatility. Banking and IT have been the primary drivers, but contributions from other sectors will be crucial to sustaining this rally.
The overall market trend appears bullish, with strong support levels and favorable technical indicators. However, traders should remain cautious of any sudden swings induced by macroeconomic developments.