Market Ahead, December 23: Top factors that could guide markets this week

The rejig in Sensex constituents, December series F&O expiry, stock-specific developments, and global cues are some factors that will guide the equity markets in this holiday-shortened week. The markets will remain closed on Wednesday for Christmas.

From today, Tata Motors, Tata Motors DVR, Yes Bank, and Vedanta will be dropped from the BSE’s benchmark Sensex. They will be replaced by UltraTech Cement, Titan, and Nestle India. The stocks in question may see some price movements due to the reshuffle.

Likewise, other BSE and NSE indices will also see some churning in its constituents from December 26.

Additionally, traders can expect some short-term volatility as the December series F&O contracts will expire on Thursday and traders will roll over their positions to next month.

Participants will also track RBI's special Open Market Operation today. The RBI will simultaneously purchase and sell government securities worth Rs 10,000 crore under the special operation. Such exercises are done by the central bank when the proceeds from sale of short-term securities are used to buy long-term government securities or bonds in a bid to bring down interest rates on long-term securities. The announcement of the move prompted a rally in bank stocks last week. Traders will thus keep a keen eye on today's operation.

The domestic market would also track factors such as crude oil prices, rupee-dollar movement and investment trend by foreign investors.

Globally, a lack of clarity on the US-China trade deal has kept markets edgy and investors will seek more details on the deal before committing fresh funds. In UK, Prime Minister Boris Johnson has won the parliament's vote for his Brexit deal that sets the deadline of January 31 for Britain's departure from the European Union.

Asian shares started the week mixed. Equities were little changed in Tokyo and Seoul and fell in Sydney and Shanghai. They were little changed in Hong Kong.

In commodities, oil prices were mostly steady on Monday and Brent crude was down 4 cents at $66.10 a barrel.

Back home, the domestic market clocked a record-high closing on December 20. During the last week, the Sensex rose 672 points and the Nifty gained 185 points.

Going ahead, analysts say that traders should try to buy at any dip from higher levels keeping a close eye on 12,300.

In the end, here's a trading idea for you by CapitalVia which recommends buying Britannia Industries above Rs 3,157 with the target of Rs 3,280 and stop loss at Rs 3,060.