The Indian stock market faced a subdued session on Wednesday, with the Nifty index falling below 24,550 and the Sensex dipping 0.29% to close at 81,289.96. Despite the overall market weakness, IT stocks emerged as clear outperformers, continuing their recent momentum while other sectors struggled.
Sectoral Performance: IT Leads, Media and FMCG Struggle
Among the top gainers on the Nifty were Adani Enterprises, Tech Mahindra, IndusInd Bank, Bharti Airtel, and Adani Ports. These stocks showed positive movements, with Tech Mahindra leading the IT sector’s performance. On the flip side, the losers were dominated by the energy and consumer sectors, with NTPC, Hero MotoCorp, Hindustan Unilever (HUL), Coal India, and Tata Consumer seeing notable declines.
Except for the IT sector, all other major sectoral indices ended the day in the red. The Media index faced a sharp decline of 2%, while the FMCG index shed 1%, reflecting a pullback in key consumer-related stocks. The broader market also saw a downturn, with the BSE Midcap index down by 0.5% and the Smallcap index declining 1%.
Nifty’s Rangebound Movement
The Nifty opened marginally lower and continued to trade with a negative bias throughout the day. On the daily charts, the index has been confined within a narrow range of 24,500 to 24,800 over the last five trading sessions. This consolidation suggests a waiting game, with traders eagerly anticipating a breakout.
A decisive move above the 24,750 level would signal the resumption of the next upward leg, which could see the index targeting new highs. On the downside, the 24,500 to 24,450 range remains a critical support zone. Any break below this level could suggest a further downside risk for the Nifty.
Derivative Data and Market Sentiment
Looking at the derivative data for the upcoming expiry on December 19th, significant open interest (OI) buildup has been observed at the 24,600 strike, indicating that at-the-money (ATM) straddles are being created. This suggests that the market is likely expecting rangebound movement in the near term, with traders positioning for potential volatility in both directions.
The Nifty Weekly Put-Call Ratio (PCR) stands at 0.77, which points to a slightly bearish sentiment in the market. While this is not overly negative, it indicates that more puts are being written compared to calls, suggesting that traders are hedging for a potential pullback or short-term weakness.
Broader Market Correction
The broader market witnessed a correction, with the Midcap and Smallcap indices both losing ground after several consecutive days of gains. The Midcap index fell by 0.46%, while the Smallcap index saw a sharper decline of 0.97%. After rallying for 8-10 consecutive trading sessions, these segments faced a well-deserved breather, which is not unusual in an ongoing uptrend.
What’s Next for the Nifty?
Despite today’s correction, we expect the Nifty to take the lead and resume its uptrend once it breaks out of the 24,500-24,800 range. Market participants will be closely monitoring the 24,750 level for a breakout, which could signal the resumption of bullish momentum. On the downside, the support zone between 24,500 and 24,450 should hold for any further upside potential.
In conclusion, while the broader market faces some consolidation and corrections, the IT sector remains a beacon of strength. Traders should watch for any signs of strength or weakness as the Nifty attempts to break free from its current range and set its course for the next move.
