Trade Setup Wednesday: Upcoming TCS, Infosys Q3 Results To Influence Market Tone; Other Key Factors

Trading in Sensex and Nifty is likely to be volatile on Wednesday as tech stocks will be in focus ahead of TCS and Infosys Q3 earnings. The IT sector is expected to report another subdued quarter with BFSI and CMT segments to remain under pressure, while the slowdown in discretionary spending still prevails. Broadly, the IT sector is expected to face drawbacks from challenging conditions in the North America market.

Also, the global tech rally lost steam after Samsung announced that it expects a 35% plunge in its operating profit in the fourth quarter of 2023. The South Korean company misses expectations by a wide margin. That being said, Wall Street ended on a mixed note overnight with the Dow Jones Industrial Average and S&P 500 in red, and the tech-heavy Nasdaq Composite marginally up.

Asian stocks are likely to follow the trend. In the early trade of Wednesday, Gift Nifty tumbled by more than 106 points or 0.5%.

On January 10, Nifty is likely to find support in the range of 21,400 to below 21,500. while a claim of 21,750 most likely will boost an uptrend.

Apart from this, investors' key focus is also on inflation data in major economies like the US, China, Japan, and even India. The upcoming inflation data is likely to provide further clarity on rate cuts from central banks.

In the previous session, after a strong rally driven by broad-based buying, however, Sensex and Nifty ended marginally up. The 30-scrip benchmark closed at 71,386.21, up by 30.99 points or 0.04%, while the 50-scrip benchmark ended at 21,544.85, higher by 31.85 points or 0.15%.

On the previous day's performance, Vinod Nair, Head of Research, Geojit Financial Services said, "Positive sentiments in the Indian IT sector fuelled by a US tech rally and demand on emerging technologies, overshadowed the anticipated muted Q3 results of the sector. Auto & realty continued to remain favourites on account of strong demand."

Also, Prashanth Tapse, Senior VP (Research), Mehta Equities said, "A sharp jump in crude oil prices and a fresh uptick in US bond yields have made investors jittery, which dampened the sentiment."

Day Trade Guide:

Nair added, "Market optimism about potential softening of US inflation is driving expectations of near-term rate cuts, bolstering overall sentiment. But in-between profit booking is emerging due to mixed cues from Asian markets as well as high valuation concerns. "

Further, Siddhartha Khemka, Head - of Retail Research, at Motilal Oswal Financial Services said, "A record registration of 40.32 lakh people (74% YoY; 31% MoM) in SIPs for December reflects confidence among investors in India's macroeconomic fundamentals and positive momentum in the market. Bloomberg Index Services to include India's Fully Accessible Route (FAR) bonds in the Bloomberg Emerging Market (EM) from September 2024 boosted the sentiments. Overall, we expect the market to consolidate in a broader range and take cues from the upcoming earning season."

Technical Outlook For January 10:

Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects Nifty to find support between 21,400 to 21,450, and resistance is likely between 21,750 to 21,800 on Wednesday. Bank Nifty's support is seen to range from 46,800 to 46,900, and resistance is expected from 47,800 to 48,000.

On a technical note, Nifty, Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said, "Selling pressure is evident within the 21700-21750 zone, and 21500 stands out as a crucial support level for Nifty. Any significant directional movement for Nifty hinges on two possibilities: achieving a closing above 21750 to reclaim bullish momentum, or experiencing a close below 21500, which could prompt additional selling pressure and potentially pull the Nifty index toward the 21200 mark."

Meanwhile, on Bank Nifty, Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said, the index witnessed continued dominance by bears as selling pressure intensified from higher levels. The index is currently facing a strong hurdle at the 48000 mark, where a significant buildup in open interest is observed on the call side. The immediate support for the index is positioned at the 47000-46900 levels. A breach below this support zone is likely to trigger aggressive selling pressure, potentially leading to further downside momentum.

Stocks To Buy On January 10:

Koothupalakkal has recommended buying in three stocks. They are:

- BUY BSE: CMP At Rs 2,301 With a Stop Loss Of Rs 2,220 For a Target Of Rs 2,500.

- BUY RVNL: CMP At Rs 185.30 With a Stop Loss Of Rs 178 For a Target Of Rs 200.

- BUY NFL: CMP At Rs 101 With a Stop Loss Of Rs 95 For Target Of Rs 111.

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.