Trade Setup Wednesday: Key Factors To Drive Sensex, Nifty Today; Stocks To Buy

Indian market may continue to consolidate over volatile global cues on Wednesday. In the early trade, Gift Nifty traded in the red, while Asian shares performed on a mixed note as Chinese stocks struggled despite monthly private factory activity data strengthening for the second time in a row. However, trading in Japanese shares remained closed due to destruction caused by a series of earthquakes. Meanwhile, US equities took a beating as tech stocks fell with sharp selling in Apple shares.

On January 3rd, Nifty is expected to find support between 21,400 to 21,500, while Bank Nifty is likely to find support in the range of 47,200 to 47,300. The immediate focus will be on the upcoming Q3 earnings of IT companies.

On the previous day, Sensex dipped by 379.46 points or 0.53% to end at 71,892.48, while Nifty 50 fell by 76.10 points or 0.35% to close at 21,665.80. Bank Nifty shed 472.65 points or 0.98% to finish at 47,761.65. Pharma, oil & gas, metals and media stocks were top performers, while banking, IT, FMCG, auto, and financials stocks were top losers on January 2nd.

Vinod Nair, Head of Research at Geojit Financial Services said that the market extended its January 1st selling in the last hour's selloff on Tuesday, taking negative cues from Asian peers due to weak Chinese manufacturing data and mounting tensions in the Red Sea, which has the potential to disrupt global trade and crude supplies.

Meanwhile, Ajit Mishra, SVP - of Technical Research, Religare Broking said, "Markets traded volatile for yet another session and lost nearly half a per cent, in continuation to the prevailing consolidation phase. The beginning was subdued and pressure in the banking, auto and IT majors was weighing on the sentiment however resilience in the pharma and energy majors capped the damage. Eventually, the Nifty index ended with a modest cut to close at 21,665.80 level. The broader indices also witnessed a choppy trend and finally closed with a marginal cut."

Wednesday's Trade Guide:

Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects Nifty to find support between 21,450 to 21,500 and resistance to be around 21,800 to 21,850 on January 3, 2024. Meanwhile, Bank Nifty is seen to have support levels from 47,250 to 47,300 and resistance around 48,000 to 48,050.

Mishra added, "The underperformance of the banking majors is largely weighing on the sentiment amid consolidation and a decisive close above 21,800 in Nifty would prompt the next leg of the up move. Meanwhile, we feel it is prudent to prefer defensive viz. FMCG, pharma and stay selective in others."

Further, Nair said that ahead of the impending results season, investors are adopting a profit-booking strategy. Auto stocks declined on below-expected volume numbers, while pharma stocks were the standout due to catch-up in the US economy.

Stocks To Buy On January 3rd:

Koothupalakkal has recommended buying in three stocks today. These are:

- BUY JINDAL SAW: CMP At Rs 442.60 With Stop Loss At Rs 435 For Target Of Rs 460.

- BUY PARAG MILK: CMP At Rs 232.80 With a Stop Loss Of Rs 228 For a Target Of Rs 245.

- BUY IOL CHEM: CMP At Rs 485 With a Stop Loss Of Rs 478 For a Target Of Rs 510.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.