Trade Setup Tuesday: RBI Meet, Q3, Global Trends To Dictate Mood In Sensex, Nifty; 3 Stocks To Buy Today

Indian stocks are likely to be under pressure or volatile amidst selloffs in global cues. Notably, RBI will commence its 3-day policy meeting from Tuesday onward, which will be a key focus of investors alongside Q3 results. In the early trade, Gift Nifty was marginally down, while Asian shares slipped tracking the downfall in Wall Street.

The bearish trends in the global market come after US Federal Reserve's chair Jerome Powel dulled hopes for sooner-than-expected rate cuts and mixed Q3 earnings.

On February 6, Nifty 50 is expected to range between 21,400-21,700 levels. Major companies like Britannia, Godrej Properties, JK Tyre, Lemon Tree Hotels, Max Financial Services, Nazara Technologies, NLC India, Nykaa, Radico Khaitan, Trident, Tata Teleservices, and others will be in focus for their Q3 results scheduled today.

RBI is expected to maintain a status quo in February 2024 monetary policy, which is the last for the financial year 2023-24. Policy repo rate is likely to stay a 6.5% accordingly with the "withdrawal for accommodation" stance.

On the previous day, the broader market failed to sustain the positive momentum, with both Nifty and Sensex witnessing a sharp fall in the last hours of trading. Nifty gave up the crucial 21,800 mark, closing 82 points lower at 21,772, while Sensex dropped 354 points to 71,731. The Nifty Bank slipped 145 points to 45,826, and the Midcap Index was down 67 points at 48,410.

On the performance, Vinod Nair, Head of Research, at Geojit Financial Services said, "The Indian market witnessed a sharp fall during the final hours of today's trading. The robust US job data for January indicates that the expected rate cuts from the Fed in the coming year may be less imminent. This is reflected in the recent sharp climb in US bond yields to above 4% levels, which prompted investors to book profit from the post interim Budget rally amidst elevated valuations. However, the current drop in crude prices provides support and restrains the decline."

Trading Guide For February 6:

Siddhartha Khemka, Head - of Retail Research, Motilal Oswal Financial Services said, the RBI policy meeting will start on Tuesday and it is expected to maintain the status quo in line with the US Fed. Overall markets are consolidating at higher levels. With 2 key events behind, markets are taking cues from ongoing results which is leading to a lot more stock-specific action which is likely to continue.

Prashanth Tapse, Senior VP (Research), Mehta Equities said, "Luggish mood in global markets contributed to the overall weakness in local shares, as investors booked profit in select stocks amid dimming hopes of a rate cut in the near term. With the US Fed indicating that a rate cut may not happen immediately, RBI is also expected to follow suit and maintain the status quo. Besides, a rise in the US bond yields, persistent geopolitical tensions, and China's economic woes added to existing woes. Technically, Nifty's biggest support is placed at the 21407 mark, and the landscape will be positive as long as Nifty trades above the 21137 mark with aggressive targets at the 22127 mark."

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, Indications are in favour of consolidation to continue and expect Nifty to respect the 21,450-21,600 zone, in case the profit taking extends. Interestingly, the prevailing buoyancy in the PSU pack and broader indices has not been impacted so far but we feel traders should now maintain caution while chasing the momentum and keep an exit plan in place."

Technical Analysis Of Market Today:

Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher expects Nifty to find support at 21,650 and resistance at 21,900 on February 6. Bank Nifty is seen to have support and resistance at 45,500 and 46,200 respectively.

Giving technical views on Nifty, Kunal Shah, Senior Technical & Derivative Analyst, LKP Securities said, the Nifty index has formed a double top pattern on the daily chart, signalling a potential cautionary stance for traders. The resistance level is identified at 22,200, and a decisive break above this on a closing basis could invalidate the bearish outlook. Conversely, the support for the index is situated at 21,650, coinciding with its 20DMA (20-day moving average). A breach below this support level might intensify selling pressure in the market.

Meanwhile, on Bank Nifty, Shah said, the Bank Nifty index is currently in bearish territory, encountering formidable resistance at 46,500. The index's immediate support is positioned at 45,400, and a breach below this level is anticipated to trigger additional selling pressure. The index persists in a "sell on rise" mode unless it convincingly surpasses the 46,500 mark on a closing basis.

Stocks To Buy On February 6:

Koothupalakkal recommended buying three stocks on February 6. They are:

- BUY GMDC LTD cmp 489.45 Stop Loss 482 Target 514

- BUY CIE AUTOMOTIVE INDIA cmp 494 Stop Loss 485 Target 517

= BUY BHARAT FORGE cmp 1271 Stop Loss 1250 Target 1315

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.