Trade Setup Thursday: Sensex, Nifty To React On FOMC Minutes, Q3 Earnings In Focus; Stocks To Buy

Indian market is likely to continue to witness pullbacks on Thursday amidst selling pressure in global cues. In the early trade, Gift Nifty traded down by half a per cent, while Asian shares continued to tumble. US stocks were also in red. On January 4th, Nifty's support levels in expected to range between 21,300 to 21,400.

Investors eyed the FOMC minutes of the December 2023 meeting on Wednesday. As per the minutes, Fed officials cited lower inflation risks, while being convinced that inflation was coming under control. However, the officials expressed concerns related to the damage that 'overly restrictive' monetary policy could do to the economy ahead. Accordingly, they agreed that a lower target range for key interest rates by the end of 2024 would be appropriate.

On the previous day, Sensex ended at 71,356.6, down by 535.88 points or 0.75%. While Nifty shed 148.45 points or 0.69% to end at 21,517.35. IT and metal stocks were the top underperformers of the market ahead of the Q3 earnings season.

Technical Views For Thursday's Trade:

On Nifty 50, Rupak De, Senior Technical Analyst at LKP Securities said, the Nifty dipped below the support level of 21650, resulting in a decline towards 21500. The prevailing sentiment appears weak, highlighted by the index closing below the crucial support at 21650. If it continues to drop below 21500 in the upcoming days, it could potentially exacerbate the negative sentiment, especially with expectations of substantial unwinding by writers below 21500. The broader market outlook suggests a sell-on-rise strategy as long as it stays below 21650.

While on Bank Nifty, Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said that the index experienced significant volatility on the day of the weekly expiry, maintaining a bearish trend as long as it stays below the key level of 48000. The index, however, managed to sustain above its 20-day moving average (20DMA) support at 47688. It is crucial for the index to hold this level, as a decisive break below it could intensify the selling pressure in the market. Traders should closely monitor the movements around 48000 and 47688 for potential trend changes and trading opportunities.

Also, Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects Nifty to find support in the range of 21,350 to 21,400, and resistance around 21,650 to 21,700. Meanwhile, Bank Nifty is seen to have support between 47,250 to 47,300, and resistance to range from 48,000 to 48,050.

Stocks To Buy On January 4th:

Koothupalakkal has recommended buying three stocks today. These are:

- BUY BSE LTD: CMP At Rs 2253 With Stop Loss Of Rs 2215 For Target Of 2380

- BUY CARYSIL LTD: CMP At Rs 860 With a Stop Loss Of Rs 847 For a Target Of Rs 910

- BUY HAL: CMP At Rs 2870 With Stop Loss Of Rs 2820 For Target Of Rs 3000

Day Trade Guide Today:

Ajit Mishra, SVP - Technical Research, Religare Broking said that the recent correction is healthy so far despite the underperformance of two key sectors viz. banking & IT and participants should focus largely on buying opportunities on dips till Nifty holds the 21,200 level. Defensive viz. pharma and FMCG are attracting noticeable interest on the expected lines while others are contributing on a rotational basis. Traders should align their positions accordingly but refrain from aggressive longs.

Overall Siddhartha Khemka, Head - of Retail Research, at Motilal Oswal Financial Services said "We expect the market to consolidate and take a pause before the quarterly results start, leading to more stock-specific action."

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.