Bearish start to 2024: Sensex and Nifty face negative opening, analysts watch market dynamics closely

Mumbai (Maharashtra) [India], January 2 : The stock market kicked off the trading day on a bearish note as it opened low on Tuesday, encountering negative fluctuations. The benchmark indices, Sensex and Nifty, faced a dip in their initial values, reflecting the prevailing market sentiment.
The Sensex recorded a decline of 100.68 points, opening at 72,171.26, while the Nifty experienced a drop of 39.60 points, starting at 21,702.30. This downward trend set the tone for the day's trading activity, prompting investors to closely monitor market movements.
A closer look at Nifty companies revealed a mixed picture, with 20 advancing and 29 declining. Notable gainers among the Nifty companies included Divi's Lab, Tata Consumer Products, Sun Pharma, Cipla, and Dr Reddy, while Ultra Cement, Eicher Motors, M&M, Adani Enterprises, and Infosys emerged as the top losers.
Varun Aggarwal, founder and managing director, Profit Idea said, "The analysis of sectorial RRG shows that Realty, Energy and Infra sector are inside the Leading quadrant which indicates it is likely to outperform the broader market. The pharma and Metal sector under the weakening quadrant suggests momentum is likely to decline. Banking and FMCG are inside the Improving quadrant which suggests strength is still low but momentum will start improving".
Sectorial analysis using the Relative Rotation Graph (RRG) indicated intriguing trends. The Realty, Energy, and Infra sectors found themselves in the Leading quadrant, suggesting a likelihood of outperforming the broader market.
Meanwhile, the Pharma and Metal sectors positioned in the Weakening quadrant indicated a potential decline in momentum. Banking and FMCG, situated in the Improving quadrant, hinted at improving momentum, even though their strength remained relatively low.
In the derivatives market, India VIX witnessed a significant increase of 19.31 per cent, rising from 12.69 to 15.14 levels in the December series.
The spike in volatility was attributed to call writers getting trapped, creating an opportunity for bullish momentum.
The Nifty observed a rollover of 79.5 per cent in the January series, aligning with its quarterly average of 78.7 per cent.
Aggarwal said, "India VIX increased by 19.31 per cent from 12.69 to 15.14 levels in the December series. Volatility steamed higher as call writers got trapped and created way for the bulls to be in momentum. Nifty witnessed rollover of 79.5 per cent in Jan series which is in line with its quarterly average of 78.7 per cent".
"Open interest of Nifty future increased by 29.1 per cent on expiry-to-expiry with the rise in price by 8.2 per cent which indicates long positions were added during the series. Nifty began the Jan series with an open interest of 13.83 million shares as compared to 10.71 million shares at the start of the December series. Open interest activity in Nifty remained a bit higher along with a higher Put Call Ratio amid higher volatility which suggests on dips stance in the ongoing series," said Aggarwal
The open interest of Nifty futures rose by 29.1 per cent on an expiry-to-expiry basis, accompanied by an 8.2 per cent increase in price, suggesting the addition of long positions during the series.
As the January series commenced, Nifty began with an open interest of 13.83 million shares, compared to 10.71 million shares at the start of the December series.
The overall open interest activity in Nifty remained relatively higher, coupled with a higher Put Call Ratio amid increased volatility, indicating a "buy on dips" stance in the ongoing series.
Investors are expected to closely monitor these dynamics as the trading day unfolds, adapting their strategies to the evolving market conditions.