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Dalal Street kicks off January series on a robust note despite Omicron fears; factors that pushed markets higher

On weekly charts, Nifty has formed a long bullish candle that also supports a short-term uptrend. But 17600 or 50 day SMA could act as an important resistance level for the traders, said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.

December 31, 2021 / 04:48 PM IST

The Indian stock market ended the first day of the January series on December 31 on a robust note setting aside Omicron fear. At close, Sensex jumped 459.50 points or 0.80% at 58253.82, and the Nifty jumped 150 points or 0.87% at 17354.

All sectoral indices on the BSE ended in the green. The BSE midcap and smallcap indices added over a percent each.

The markets have successfully closed above the 17350 level. This should allow the Nifty to move up further to 17500-17600. The level of 17100-17150 is the new support and as long as that holds, the trend of the Nifty is positive, said Manish Hathiramani, proprietary index trader and technical analyst at Deen Dayal Investments.

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Here are the factors that have pushed the market higher:

Close

Positive global cues

The Asian markets traded on a positive note with Hong Kong stocks leading with gains among major Asia-Pacific markets. The Hang Seng index in Hong Kong jumped 1.24 percent to 23,397.67. Markets in Australia, Hong Kong and Singapore closed early on Friday for the final trading day of the year. Elsewhere in Asia, markets in Japan and South Korea were closed on Friday.

US jobless claims drop, showing no Omicron hit yet

New claims for US unemployment benefits fell in the week leading up to Christmas and benefits rolls slid to their lowest level of the coronavirus pandemic era the week earlier, the Labor Department said on Thursday, data that showed no impact yet on employment from the rapidly spreading Omicron variant.

Initial claims for state unemployment benefits dropped to a seasonally adjusted 198,000 for the week ended Dec. 25 from a revised 206,000 a week earlier. Early this month, claims dropped to a level last seen in 1969.

Auto stocks gain ahead of December sales

The auto index added over 1.5 percent at close ahead of the December sales data. Maruti Suzuki, Tata Motors and Bajaj Auto were the top gainers adding over a percent each while Mahindra & Mahindra and Eicher Motors were the other gainers.

All sectors participated in the run

All sectoral indices are trading in the green led by the metal index which gained 2 percent followed by auto, FMCG, realty and financials. The BSE midcap and smallcap indices are up over 1 percent each.

Technical View

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

Nifty had taken support near the junction of the 40 WEMA & the weekly lower Bollinger Band in the penultimate week. In the last week, it witnessed recovery thereon. On December 31, the index surpassed a falling trendline as well as the 40 DEMA. Thus the Nifty has created headroom for itself. It is now set to test 17600 on the upside where it had faced resistance in the recent past. The daily upper Bollinger Band is also present near 17600 thus making it a crucial level for the short term. On the other hand, lower end of the recent brief consolidation i.e. 17150-17100 will act as a short term support zone.

Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities

Markets showed a lot of optimism in the last trading session of the year despite mixed cues from global indices. In Spite of the recovery, nervousness amongst investors could persist going ahead due to rising cases of Omicron and worries that any fresh curbs could hinder growth momentum. Technically, the Nifty is currently comfortably trading above 20 day SMA and has maintained a higher bottom formation on intraday as well as on daily charts which is broadly positive for the market. On weekly charts, the index has formed a long bullish candle that also supports a short-term uptrend. But 17600 or 50 day SMA could act as an important resistance level for the traders.

In the near future, as long as the index is holding 17200 or 20 day SMA, the chances of hitting 17550-17600 are bright. Further upside may also continue which could lift the index up to 17725-17800 levels. On the flip side, a close below 20 day SMA could see Nifty fall to 17050-16950. Meanwhile, after a short term correction, the Bank Nifty has formed a promising reversal formation near 34500. The structure suggests 35000 and 34500 would be the sacrosanct supports for the index, and above the same the uptrend momentum is likely to continue till 36000-36500.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandip Das
first published: Dec 31, 2021 12:58 pm
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