Trade Setup Thursday: Key Factors To Drive Bulls And Bears In the Market Today

Indian stock market may continue to face a bearish trend or trade cautiously on Thursday amidst feeble global cues. In early trade, Gift Nifty traded lower, while Asian shares performed on a mixed note. Wall Street and treasury yield declined on the probability of a rate cut from the US Federal Reserve as early as March. In the previous session, Sensex dived by at least 1700 points and Nifty 50 shed nearly 482 points decline.

Here's what to expect from today's trade in the Indian market:

On the previous day's performance, Vinod Nair, Head of Research, at Geojit Financial Services said, "A nosedive correction in banking stocks, along with concerns over delays in US FED rate cuts, impacted market sentiments. The addition of discouraging Chinese growth data and rising US bond yields also resulted in widespread profit-booking. Given the elevated valuations, coupled with the fact that optimism regarding earnings and GDP growth for FY24 is already reflected in the market, triggered the correction. "

Jaykrishna Gandhi, Head - Business Development, Institutional Equities, Emkay Global Financial Services said this week markets took a turn today with Nifty banks falling ~4% as HDFC bank share price slipped 7% on concerns around a slowdown in deposit growth. As talks around rate cuts continue and as banks struggle with balancing credit growth vs margins, we are likely seeing a tactical rotation towards good-quality NBFCs.

"As the street is baking in good earnings growth for most mid-cap names, Incrementally flows will be driven on how close actual releases come vs expectations built," Gandhi added.

Further, Prashanth Tapse, Senior VP (Research), Mehta Equities said that hawkish comments by the US Fed triggered a spike in yields on the US 10-year bonds and the US dollar index, which spooked European and Asian markets, including India. India's stock market valuations are also expensively valued compared to other global stock indices and investors would wait for more positive cues now to extend their equity exposure. There are challenges in the near term such as persisting conflict in the Middle East and worries over delay in the US Fed rate cut, which could dampen investors' sentiment going ahead. If today's drubbing at Dalal Street is any indication then Nifty is likely to witness another uninspiring session in tomorrow's session. Nifty's biggest support is placed at the 21421 mark, while the biggest hurdle will be at its all-time high at 22124.15 mark.

On Nifty, Rupak De, Senior Technical Analyst, LKP Securities said that the index witnessed a significant decline driven by profit-taking following its record high of 22,124 in the previous trading session. Wednesday's profit booking led the index to the 21-day Exponential Moving Average, a crucial short-term moving average. Sentiment could potentially deteriorate further if the Nifty drops below 21,550, where the 21EMA is situated. On the downside, a breach of 21,550 may result in the index descending towards 21,350. Conversely, on the upside, resistance is observed at 21,650.

Lastly, on Bank Nifty, Rupak said, the index experienced a sharp decline on the back of sell-off in the heavyweight HDFCBANK. The index sharply fell below the 38.20% Fibonacci Retracement level of the previous leg of the rally (from 43,230 to 48,347). Additionally, the index retreated within the area of the previous swing high after a consolidation breakdown on the daily chart. The sentiment may remain weak, with immediate support at 45,900-45,930. A drop below 45,900 could potentially initiate a further correction towards 45,500. On the upside, resistance is identified at 46,350.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor 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.