Trade Setup for Dec 17: NIFTY50 fails to build momentum, volatility index soars 7%

Asian markets @ 8 am

• GIFT NIFTY: 24,663.50 (-0.17%)
• Nikkei 225: 39,508.29 (+0.13%)
• Hang Seng: 19,737.66 (-0.29%)

U.S. market update

• Dow Jones: 43,717 (▼0.2%)
• S&P 500: 6,074 (▲0.3%)
• Nasdaq Composite: 20,173 (▲1.2%)

U.S. indices ended Monday's session on a mixed note, with the Nasdaq Composite ending the day at a new record high, led by a rally in technology stocks. Meanwhile, Dow Jones extended losses for the eighth consecutive day, its longest losing streak since 2018.

The rally comes ahead of the Federal Reserve's last meeting in 2024, where 97% of market participants expect a 0.25% rate cut, according to Fed Funds futures. However, the bigger question will be whether the Fed will maintain the 2025 rate cut dot plot, which shows four cuts, given sticky inflation and the arrival of new policies from the Trump administration.

NIFTY50

• December Futures: 24,738 (▼0.1%)
• Open interest: 4,35,085 (▲0.1%)

The NIFTY50 index failed to provide the follow through of the Friday’s bullish price action and witnessed profit-booking at higher levels. The index lost momentum and slipped below the immediate support of 24,700, ending the Monday’s session on a negative note.

On the daily chart, the index formed a small inside candle, signaling consolidation near the 24,700 zone at higher levels. For the next session, traders should closely watch the high and low of the inside candle, as a breakout above or below these levels could offer clear directional cues. Additionally, the index remains confined within the range of December 5th, indicating heightened volatility and sharp swings in both directions.

The reading of the open interest for 19 December expiry saw significant call build-up at 25,000 and 24,700 strikes, indicating that the index may face resistance around these levels. Conversely, the put base remained established at 24,000 and 24,200 strikes, suggesting support for the index around these zones.

SENSEX

• Max call OI: 86,000
• Max put OI: 78,000
• (Expiry: 20 Dec)

The SENSEX also traded in a narrow range with significant volatility and formed the inside candlestick pattern on the daily chart. The index lacked follow-through momentum and failed to cross the immediate resistance of 82,300 zone.

The technical structure of the index remains sideways to bullish with immediate support around the 80,300 zone. Unless the index slips below this zone, the trend may remain volatile with sideways to bullish structure. However, a close below this zone will signal weakness and change in the momentum.

The open interest data for the 20 December expiry remains consolidated around the 82,000 strike, signalling range-bound movement around this zone. However, traders can monitor the change in open interest during the trading session for further directional clues.

FII-DII activity

Stock scanner

• Long build-up: Oberoi Realty, Prestige Estates, Nykaa, Paytm and Coromandel International
• Short build-up: Adani Green and Jindal Stainless
• Under F&O ban: Granules India, Hindustan Copper, Manappuram Finance, National Aluminium, RBL Bank and Steel Authority of India
• Out of F&O ban: Metropolis Healthcare and PVR Inox

In Futures and Options or F&O, long build-up means an increase in Open Interest (OI) along with an increase in price, and short build-up means an increase in Open Interest(OI) along with a decrease in price. Source: Upstox and NSE.

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