Trade Setup Wednesday: Nifty May Hold 21,750-21,900 Zone, Key Factors To Drive Market Sentiment

Consolidation in the Indian market is likely to continue on Wednesday, however, a lift could be from the healthy Q3 earnings of HDFC Bank. Nifty is likely to hold a 21,750-21,900 support zone. However, traders are suggested to be cautious. Broadly, there is a lack of fresh triggers. After a sharp rally in IT stocks, Sensex and Nifty pulled back from their fresh lifetime high levels in the previous session.

Stocks that will be in focus on Wednesday are HDFC Bank, L&T Technology Services, TV18 Broadcast, ICICI Securities, Adani Energy Solutions, Federal Bank, ICICI Lombard General Insurance Company, Network 18, and others.

Also, companies that are set to declare Q3 earnings on January 17 are - Asian Paints, LTIMindtree, ICICI Prudential Life Insurance Company, Happiest Minds Technologies, Star Housing Finance, Ganesh Housing Corporation, Moschip Technologies, Alok Industries, Oracle Financial Services Software, Hindustan Media Ventures, IIFL Finance, Speciality Restaurants, Som Distilleries & Breweries, and Steel Strips Wheels.

In the early trade, Gift Nifty traded flat but in green. After a holiday due to Martin Luther King Day, the US market saw a bearish tone. After mixed earnings from Morgan Stanley and Goldman Sachs, Wall Street settled in red.

On the global front, this week, the focus will be on comments from Federal Reserve's official Christopher Waller who will be speaking on Tuesday. In late November last year, Waller gave a dovish opinion which was one of the key drivers for bulls in the market during the last month of 2023. Additionally, investors will eye key data such as China's economic growth for Q4, UK's inflation, and US retail sales which are all together due on Wednesday.

Sensex ended at 73,128.77, down by 199.17 points or 0.27%. While Nifty closed at 22,032.30, below 65.15 points or 0.29% on Tuesday.

Ajit Mishra, SVP - Technical Research, Religare Broking said, "Markets took a breather after four days of advance and ended marginally lower. After the initial positivity, Nifty oscillated in a range and finally settled at 22,028 levels. On the sectoral front, the profit-taking in the IT, realty and energy majors were weighing on the sentiment while metal and FMCG showed resilience. The broader indices too inched lower and lost nearly half a per cent each."

Day Trade Guide Today:

Vinod Nair, Head of Research, at Geojit Financial Services, said, "The broad market exhibited profit booking following a good performance by the IT sector amid weak global cues. Investors are contemplating whether the current euphoria in markets has gone farfetched, especially with elevated domestic valuations in mid & small caps. FII flows are mixed due to a lack of fresh triggers. Oil prices stayed firm amid undeterred geopolitical tensions. The latest IIP growth signals near-term softness."

While Mishra believes indications are in favour of further consolidation in the index and expects Nifty to hold the 21,750-21,900 zone. However, traders should maintain extra caution in stock selection now citing volatility due to earnings. Besides, the current positioning of the midcap and smallcap index does not reflect the correct picture of deterioration in the broader trend so plan trades accordingly.

Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects Nifty's support at 21,900 on January 17, while its resistance is seen at 22,200. Further, Bank Nifty's support and resistance level expectations are of 47,700 and 48,500 respectively.

Stocks To Buy Today:

Koothupalakkal has recommended buying three stocks on January 17. They are:

- BUY MADRAS FERT cmp 111.50 Stop Loss 109 Target 118

- BUY BSE LTD cmp 2308 Stop Loss 2275 Target 2425

- BUY WEST COAST PAPER cmp 740.85 Stop Loss 730 Target 777

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.