Trade Setup For Dec 23: Santa Rally On Cards With Nifty Bulls Eyeing 26,300 Breakthrough By Year-End

The Nifty 50's strong start to a truncated week has lifted sentiments, with analysts expecting a "Santa rally" which could take the benchmark index across the crucial resistance of 26,300.

"We expect the calendar year to end on a strong note, potentially marking fresh milestones. In this scenario, the 26300–26350 zone is seen as the immediate upside target, with further targets likely to unfold as momentum sustains," said Rajesh Bhosale, equity technical analyst at Angel One.

On the downside, 26,050–26,000 is expected to act as immediate support, and any dip towards this zone is likely to attract buying interest, the analyst added.

"On the sectoral front, the final weeks of the calendar year are typically associated with a Santa Rally, where midcap and smallcap stocks tend to outperform. This trend has already begun to play out over the last two sessions, and given the current chart structures, this space is likely to continue delivering relative outperformance in the near term," Bhosale added.

As far as the benchmarks are concerned, 26,000 levels continues to act as "immediate cushion", while the 25,950 region serves as a stronger base in case of any corrective move, said Dhupesh Dhameja, derivatives research analyst at SAMCO Securities.

"On the higher end, sustaining above 26,200 will be crucial for the index to extend its upward journey toward 26,300 and beyond," he added.

Bank Nifty, another keenly tracked index, faces support at 58,300-58,600 levels, according to a note issued by Bajaj Broking Research. "A strength above last week’s high of 59,533 will open upside towards the recent all time high of 60,100 levels in the coming weeks," it added.

The Indian equity markets closed higher on Monday, with the benchmark Nifty 50 edging near to the 26,200-mark. The index settled 0.79% up at 26,172.4, whereas the BSE Sensex rose 0.75% to 85,567.48.

Bharti Airtel, ICICI Bank, Reliance Industries Ltd., HDFC Bank and Tata Consultancy Services emerged as the top gainers for the day. On the other hand, State Bank of India, Kotak Mahindra Bank, HDFC Life, Tata Consumers and Cipla were the worst performers of the Nifty 50 index.