Dalal Street Corner: Markets continue to hold key levels – what should investors do on Wednesday

The Indian markets gained for third straight day led by information and technology stocks, along with financials on Tuesday. The BSE Sensex gained over 200 points to end above the 60600-mark, while Nifty sustained the 18000-mark for the second straight day.  

The IT stocks moved higher ahead of major companies’ earnings are scheduled on Wednesday. On the contrary, metals plummeted by 3-4 per cent at the close after a global brokerage firm Jefferies downgraded Indian metal stocks, especially steel majors – Tata Steel and JSW Steel.   

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In the broader markets, Nifty Mid-Cap closed flat with minor gains. JSPL, SAIL, Nalco, Ramco, KPIT are top midcap losers, while Motherson Sumi, Adani Enterprises, AU Small Finance Bank, Trent, and Tata Chemicals are top midcap gainers at the market close today. 

Nifty Bank underperformed the benchmark to close marginally over 94 points higher little before the 38450-mark at the close. The market breadth favoured advances, advance-decline ratio at 1:1. 

Mid-cap IT stock such as Coforge surged over 3 per cent after Jefferies initiates coverage with a Rs 7,400 target, while PVR gains more than 3 per cent as states keep multiplex capacity at 50 per cent and Vodafone Idea slips 20 per cent as the government set to become the single-largest shareholder. 

Vijay Dhanotiya, Senior Research Analyst at CapitalVia Global Research Limited said, “The market witnessed a lackluster movement, and start an attempt to hold the level above the Nifty50 Index level of 18000. While sustaining above 18000 is the key factor from a short-term perspective.” 

He added, “Research suggests maintaining above this level is important for the market to gain momentum and extend the rally until 18200-18250. The momentum indicators like RSI and MACD to stay positive and market breadth to improve, further strengthening a short-term bullish outlook.” 

“The index has once again given a strong close. We should look forward to higher targets for the Nifty - 18400-18500 is a possibility. A strong support lies at 17700 and as long as that holds, any corrective wave can be looked at strategically to accumulate long positions,” Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments in post-market comment  

“Nifty formed a Bullish candle on a daily scale and gave its highest daily close of the last 40 sessions. Now it has to hold above 18000, for an up move towards 18200 and 18400 levels whereas support shifts higher to 17950 and 17850 zones,” Chandan Taparia Vice President | Analyst-Derivatives Motilal Oswal Financial Services Limited said in a post-market comment  

“Technically, the index has been trading with higher high & higher low formation for the last three days and sustained above the falling trendline which suggests an upside rally in the counter,” Palak Kothari Research Associate Choice Broking said in a post-market comment. 

Kothari said, “The index has been trading above 21&50-DMA as well as a momentum indicator MACD & STOCHASTIC are trading with a positive crossover on the daily time-frame which suggests strength in the counter,” 

“At present, the Index has support at 17700 levels while resistance comes at 18100 levels, crossing above the same can show 18200-18300 levels. On the other hand, Bank nifty has support at 37800 levels while resistance at 38800 levels,” the analyst added.  

As per Vinod Nair, Head of Research at Geojit Financial Services, “Domestic benchmark indices showcased a flattish trend with positive bias as the market weighed the expectations of a strong quarter amid concerns over rising cases, supply issue and inflationary pressure.” 

“Global market was on the edge as Fed meeting minutes hinted at rate hikes, elevated US inflation and the awaited release of US CPI inflation data. Domestic inflation levels are also likely to be significant due to unfavourable base effect though food prices declined during December,” he said.