Nifty, Sensex gain for 4th straight day amid uncertainty; stock-specific movement to persist

Markets are expected to consolidate in a broader range with a positive bias in the near term

Indian benchmark indices ended marginally higher on January 11 even as investors remained cautious ahead of the key earnings from IT bigwigs TCS and Infosys later in the day. US inflation data, to be released later in the night, also kept investors on edge as it would have an impact on rate decisions.

The Sensex closed 63.47 points or 0.09 percent higher at 71,721, and the Nifty was up 28.50 points or 0.13 percent at 21,647. About 2,084 shares advanced, 1,175 declined, and 77 remained unchanged. In the broader markets, BSE Midcap and BSE Smallcap indices outperformed benchmark Sensex, rising around 0.7 percent each.

Sectorally, Nifty Auto index led the gains, rising over one percent to touch fresh record highs, followed by Nifty Energy, Nifty Bank, Nifty Infra and Nifty PSU Bank index. Meanwhile,Nifty IT, Nifty Metal and Nifty Pharma indices fell marginally.

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In anticipation of inflation data from the US, the Indian market exhibited range-bound trade. Though investors anticipate US inflation to ease, global markets, expecting a CY24 interest rate cut, have already priced in optimism, said Vinod Nair, Head of Research, Geojit Financial Services.

"Profit booking occurred amid moderating Q3 corporate earnings and concerns about premium valuations. Selling pressure on IT stocks stemmed from weak earnings estimates," Nair said.

According to analysts, FII and DII behavior has lacked consistency this month, characterized by alternating patterns of buying and selling, constraining the market within a range. Significant triggers are required for the market to either break out or break down from this range.

"A probable negative trigger can be a slightly hawkish statement from the Fed postponing the rate cuts which the market expects to begin by March 2023, according to V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Technical view

Nifty faced selling pressure within the 21,700-21,750 range, yet found stability as it held above its 10-day moving average, concluding the session with a positive close. "Presently, Nifty's immediate support has shifted to 21.600, while 21,730 serves as a resistance level on the technical chart. The broader positional support for Nifty remains at 21,500," said Kunal Shah, Senior Technical & Derivative Analyst, LKP Securities.

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Bank Nifty index witnessed ongoing struggles between bulls and bears, leading to a volatile trading session. "A significant hurdle for the index is identified at 48000, marked by substantial call writing. A decisive breakthrough above this level is anticipated to trigger a sharp short-covering rally," said Shah.

"On the downside, the lower-end support remains intact at 46900. A close below this support level may intensify selling pressure in the market," he added

According to Vijayakumar of Geojit, the Q3 results season will provide indications of the Nifty earnings for FY24. Financials, capital goods, telecom, automobiles and hotels will post good numbers. IT results will be tepid and FMCG will be a mixed bag. More than broad market action, market responses will be stock-specific in response to results and management commentary," he said.

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