Trade Setup Thursday: Q3 Earnings, US Inflation Among Key Factors To Drive Sentiments In Sensex, Nifty

Indian markets will trade between cautious to positive tone on Thursday ahead of major tech companies earnings for the third quarter of FY24. TCS and Infosys will announce their Q3 results on January 11. In the early trade, Gift Nifty was up by 114 points or 0.53%, while US stocks ended higher as tech stocks drove the performance while awaiting US inflation data on Thursday and also taking in the dramatic events related to bitcoin ETF.

In the previous session, Sensex ended at 71,657.71, up by 271.50 points or 0.38%, while Nifty 50 finished at 21,618.70, higher by 73.85 points or 0.34%.

On yesterday's performance, Vinod Nair, Head of Research, at Geojit Financial Services said, "The weakness in global indices continued to weigh down the domestic indices with every up move. The market is looking for fresh triggers for a direction, and the release of US and Indian inflation data may provide a near-term direction in the market. The investor's focus will be shifted to the earnings season, on a sequential basis, the earnings growth is likely to be lower, while the expectations for auto, capital goods, and cement will remain strong."

Day Trade Guide:

Prashanth Tapse, Senior VP (Research), Mehta Equities said, "From a technical perspective, Nifty's aggressive upside targets are still seen at the psychological 22000 mark, with confirmation of strength only above the 21836 mark."

While Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said, "US inflation data to be released on Thursday has kept global investors on edge as it would have an impact on rate decisions. However, the Indian Market is showing strength despite global volatility. We expect Markets to consolidate in a broader range with a positive bias as overall Q3 earnings are estimated to remain healthy. Technology sector is expected to remain in focus as IT major TCS and Infosys will announce their Q3 results on Thursday. Their management's commentary and guidance would set a precedent for other tech companies."

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "We are seeing a balancing act by select heavyweights amid the mixed trend in banking and IT majors. And, indications are in the favor of prevailing consolidation to continue in the index thus participants should maintain their focus on stock selection and risk management."

Also, Jaykrishna Gandhi, Head - Business Development, Institutional Equities, Emkay Global Financial Services said, "FII flows have been erratic this year with ~50% of the days seeing negative flows. The start of the Q3 earnings season, coupled with uncertainty in the Middle East and the recent increase in Russian aggression should dominate the market news flow in the coming weeks."

Technical Outlook Today

Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects Nifty 50 to have support between 21,500/21,450 on Thursday, while its resistance levels are likely to range between 21,750/21,800. Further, Bank Nifty is expected to have support levels of 47,000/46,950, and resistance seen between 47,800/47,850.

On Nifty, Kunal Shah, Senior Technical & Derivative Analyst, LKP Securities said that the index bounced back strongly from its important support at 21,500, indicating that the bulls are quite active at this level. The Nifty closed at 21,623, near its resistance. If it manages to close above 21,700-21,750 levels, we might see the Nifty reaching 22,000. For those looking to buy Nifty, the recommended range is between 21,550-21,600. Set a stop loss at 21,480 and aim for a target of 21,750.

Meanwhile, on Bank Nifty, Shah added the index experienced a volatile trading session on the day of weekly expiry, but the bulls successfully defended the crucial support level of 47000. Despite this, the overall market sentiment remains in "sell on rise" mode. The immediate hurdle for the index is at 47500, where the highest open interest is concentrated on the call side. To initiate a short-covering move and potentially target the 48000 mark, the index needs to convincingly surpass the level of 47500 on a closing basis.

Stocks To Buy Today:

Koothupalakkal has recommended to buy three stocks on January 11. These are:

- BUY TOURISM FINANCE cmp 133.35 Stop Loss 130 Target 144

- BUY GRSE cmp 905 Stop Loss 887 Target 960

- BUY IRFC cmp 103 Stop Loss 100 Target 112

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.