Trade Setup Tuesday: Q3, Private Banks, Global Trends Among Key Factors To Influence Market's Mood

Indian market is likely to have a positive start on Tuesday, on the back of a bullish trend in global cues. In the early trade, Gift Nifty traded up nearly 1%, while Asian shares picked up momentum tracking record high upside on Wall Street. Sensex and Nifty had a volatile last week.

On the global front, investors are reacting to Beijing's latest pledge to arrest a stock rout coupled with the Bank of Japan's policy decision. Meanwhile, the Dow Jones index crossed 38,000 for the first time, and that of the S&P 500 index and tech-heavy Nasdaq Composite also reached their new all-time high.

At home, traders will react to major private banks' Q3 earnings. In a broader aspect, the third quarterly performance of corporates will continue to influence sentiments heavily.

On Saturday, in a one-of-a-kind trading session, Sensex ended at 71,423.65, down by 259.58 points or 0.36%. Nifty 50 closed at 21,571.80, lower by 50.60 points or 0.23%.

In a holiday-shorten trading week, there will be only three trading sessions on BSE and NSE. The market was closed due to the Ayodhya Ram Mandir ceremony on January 22, followed by another holiday on Republic Day, January 26, 2024.

Vinod Nair, Head of Research, at Geojit Financial Services said, "Subdued performance was reflected in the market amidst weakening global cues and elevated domestic valuations in mid- and small caps, eroding investor confidence. Strong US retail sales and rising US bond yields diminish expectations of a swift Fed rate cut, redirecting investor focus to safer bonds. In addition, discouraging Chinese economic data further contributed to the lacklustre sentiment."

Nair added, "while the private banks' bottom line aligned with market expectations, investors expressed disappointment due to the lesser-than-anticipated growth in deposits and the contraction observed in the NIM. The IT sector's outperformance on the back of better-than-expected results was not enough to counter the weakness in banking stock during this week. FIIs maintained a risk-off stance amid concerns over persistent interest rates and initial Q3 results suggesting a potential domestic earnings slowdown."

Looking ahead, Nair said, the interest rate decisions of the BoJ and ECB, along with US GDP data, are anticipated to drive market dynamics.

Day Trade Guide:

Siddhartha Khemka, Head - of Retail Research, Motilal Oswal Financial Services said, this week is a truncated week following the holiday on Monday on account of pran pratishtha of Ram temple in Ayodhya and on Friday on account of Republic day. Traders should stay light as earnings season would get in full swing leading to stock-specific action largely. Moreover, the interest rate decision of the BoJ and ECB is due next week along with US GDP and PMI data which would influence the global rate cut trajectory.

Also, Nair said, the interest rate decisions of the BoJ and ECB, along with US GDP data, are anticipated to drive the market dynamics.

Meanwhile, Ajit Mishra, SVP - Technical Research, Religare Broking said, Nifty has reclaimed its short-term moving average but lacks decisiveness. We reiterate our cautious view citing the prevailing underperformance of the banking and eyeing the 21,700-21,850 zone to act as a hurdle. Traders should continue a stock-specific approach and prefer hedged trades.

Technical Outlook:

Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher expects Nifty to find support at 21,450 and resistance at 21,700 on January 23rd. For Bank Nifty, the support and resistance levels are seen at 45,700 and 46,500 respectively.

Stocks To Buy:

- BUY THOMAS COOK cmp 163.50 Stop Loss 160 Target 172

- BUY GRSE cmp 919 Stop Loss 903 Target 970

- BUY COAL INDIA cmp 398.80 Stop Loss 392 Target 415

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor 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.