Trade Setup Friday: Nifty Support Levels, Key Factors That Will Influence Market Sentiments

Indian market may see a mixed to flat tone on Friday, with a potential indicator of an upside. In the early deals, Gift NIFTY was in green but with tepid demand. Also, Asian stocks sank amidst rate cut sentiments, however, US stocks bounced back to green driven by a sharp upside in Apple and other blue chips.

On Thursday, Nifty struggled to hold 21,400 levels. If the benchmark slips below this mark, then it could revisit 21,250 to 21,200 support levels.

Sensex ended at 71,186.86, down by 313.90 points or 0.44% on January 18. While Nifty shed 109.70 points or 0.51% to end at 21,462.25. Banking, financials, IT, FMCG and metal stocks were top laggards.

Here is the trade guide for January 19:

Ajit Mishra, SVP - Technical Research, Religare Broking said that markets extended fall and lost half a per cent amid volatility. After the gap-down opening, Nifty tried to pare losses but continued fall in HDFC Bank and fresh decline in select heavyweights capped the recovery. Meanwhile, energy, banking and metal were among the top losers on the sectoral front while pharma and realty showed some strength. The broader indices also managed to end unchanged after a volatile swing.

He added, that Nifty couldn't defend the short-term moving average i.e. 20 EMA on the expected lines and came closer to the next crucial support of 21,200 level. Indications are now in favour of some consolidation after the recent fall and any rebound to 21,700-21,850 would attract fresh shorts. We thus reiterate our view to reduce positions on the rise and wait for some stability in the trend.

Meanwhile, Prashanth Tapse, Senior VP (Research), Mehta Equities said that investors will be more watchful about the ongoing earnings season as any stress on quarterly numbers could dampen the sentiment in the near term. A sharp rise in crude oil prices also cautioned investors to trim their positions in banking, IT and power stocks."

Moreover, Vinod Nair, Head of Research, Geojit Financial Services investors are trimming bets on rapid FED cuts due to strong US retail sales and the resulting rise in global bond yields. Furthermore, oil price advances and rate escalation risks have led to disruptions in global shipping and crude production. The broader market continued its selling pressure given the elevated valuation and profit booking with an aim for sector rotation.

On Nifty 50, Rupak De, Senior Technical Analyst, LKP Securities said, the Nifty slipped below the rising trendline on the daily chart, suggesting a bearish trend reversal. Besides, the index has fallen below the critical near-term moving average. Now, the trend is likely to remain weak as long as the index stays below 21,550. A decisive move above 21,550 might weaken the bears; until then, bears might control the market. On the lower end, support is placed at 21,400. A drift below 21,400 might take Nifty for a revisit to 21,250-21,200.

Further, on Bank Nifty, Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said, the bears maintained control over the Bank Nifty index, leading to a 0.76% decline. The index's immediate support is positioned at the 45500-45400 zone, and a successful defence of this level could trigger a rebound towards 46500. Despite potential short-term fluctuations, the broader trend continues to favour a "sell on the rise" approach, suggesting caution and a likelihood of further declines if the mentioned resistance level is not convincingly breached.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.