Trade Setup Tuesday: Key Factors To Influence Sensex, Nifty Today: Stocks To Buy

Indian market is likely to witness a positive to a flat start on Tuesday amidst mixed global cues. In the early trade, Gift Nifty was broadly flat, while Asian markets traded mixed despite Wall Street gaining overnight. Globally, investor participation is likely to be lower on account of Thanks Thanksgiving holiday on Thursday. Also, traders will await for US existing home sales data and FOMC meeting minutes scheduled for tomorrow.

At home, Nifty has seen time-wise correction despite the sharp underperformance of banking stocks. The 50-scrip benchmark is expected to find support between 19,500 to 19,600 levels, but a break above 19,850 could open the probability of new all-time highs.

On Tuesday, Sensex and Nifty 50 ended in red owing to the weak global economy which has impacted foreign inflows and sentiments on a broader scale. Also, RBI's scrutiny in banking and NBFC has led to intense pressure on these stocks. Sensex finished at 65,655.15, lower by 139.58 points or 0.21%, while Nifty 50 ended at 19,694 down by 37.80 points or 0.19%.

On yesterday's market performance, Vinod Nair, Head of Research at Geojit Financial Services said, "Elevated long-term interest rate trends and a weakening global economy continue to hurt inflows and market movement. The recent softening of inflation in the US & India and the negative trend of crude are expected to help the view on global equity and India in the short term. In that context, the ease in FIIs selling is helping the domestic markets but continues to consolidate primarily due to India's premium valuation relative to global peers. In this scenario, the IT sector is benefiting; however, valuation continues to be on the higher side compared to long-term history, suggesting a cautious approach in the sector in the medium term."

Meanwhile, Siddhartha Khemka, Head - of Retail Research, at Motilal Oswal Financial Services said, "Weakness continued in Financial stocks for the second consecutive day after RBI tightened norms for consumer credit. Overall market is likely to consolidate in a range as the focus will be on the US FOMC meeting minutes which will be released on Wednesday. Globally, participation could be lower on account of Thanks Giving Holiday on Thursday. Investors would watch for US existing home sales data that will be released on Tuesday."

For Nifty 50, Kunal Shah, Senior Technical & Derivative analyst at LKP Securities said, "The Nifty index is currently trading within a broad consolidation phase, forming an inside bar candle pattern, with support observed at 19,650 and resistance at 19,800. For a decisive trending move, the index needs to break out of this range with significant volumes on either side. Despite the consolidation, the broader picture remains bullish, with major support identified in the 19,550-19,500 zone. A break above 19,850 is anticipated to open up room for the index to reach all-time high levels"

In the case of Bank Nifty, Shah added the Bank Nifty index has formed a doji candle on the daily chart, suggesting indecisiveness at the current levels. The index encounters formidable resistance at 44,000, where the highest open interest is concentrated on the call side. A breakthrough above this level is anticipated to trigger sharp short-covering moves. Conversely, the lower-end support is positioned at 43,300, and a breach below this level could pave the way for further downside movement towards the 42,800 level. This data highlights a delicate balance in market sentiment, with the potential for significant moves based on key resistance and support levels.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "We are seeing a time-wise correction in Nifty so far despite the underperformance of the banking pack. Besides, the pause in the US markets is also capping the move. Amid all this, we reiterate our bullish view on the index and suggest continuing with the "buy on dips" approach. Traders should stick with the other performing sectors and utilise this phase to gradually add quality names."

Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher has recommended buying three stocks on Tuesday. These are:

- BUY GHCL LTD at 540.90 stoploss 532 Target 567

- BUY SCHNEIDER at 344.70 stop loss 338 Target 362

- BUY RUCHIRA PAPERS at 130.40 stoploss 128 Target 138