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Trade setup for January 28: Nifty technical view, Q3 results, global cues; things to know before opening bell

Benchmark indices Sensex and Nifty 50 are likely to open lower on Friday as trends on SGX Nifty hinted at a gap-down start with a loss of 42 points. The Nifty futures were trading around 17,125 levels on the Singaporean exchange.

Share Market
Sensex, Nifty stare at gap-down start on Friday

Indian equity markets on Thursday slipped 1% per cent, continuing the steep fall as consistent FII selling, elevated oil prices, rising inflation concerns and Fed interest rate hike weighed on investor sentiment. Benchmark indices Sensex and Nifty 50 are likely to open lower on Friday as trends on SGX Nifty hinted at a gap-down start with a loss of 42 points. The Nifty futures were trading around 17,125 levels on the Singaporean exchange. “With the Fed outcome now behind, domestic investors will keenly watch out for the upcoming Union Budget on 1st February for near term market direction. Technically, Nifty managed to hold the support of the previous day and saw a recovery from the lower levels. Now, the index needs to hold the important level of 17000, for the bearishness to pause. However, volatility cannot be ruled out given big events in near future,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Key to watch out for before market opening bell

Global cues: Global cues were mixed on Friday. US stocks fell in Thursday’s choppy trading session as concerns about interest rates hike by the Fed weighed on investors’ sentiment. The S&P 500 closed with a third straight loss, down 0.54%. Dow Jones Industrial Average fell 0.02% while Nasdaq Composite ended 1.40% lower. Meanwhile, markets in Asia mostly traded higher on Friday, following the volatile session on Wall Street overnight. Japan’s Nikkei 225 gained 1.71% in early trade, while the Topix was up 1.58%. South Korea’s Kospi reversed losses to rise 0.62%. In China, the Shanghai Composite gained 0.46%, while the Shenzhen Component was marginally lower. Hong Kong’s Hang Seng index declined 0.56%.

Nifty technical view: “A small body of positive candle was formed on the daily chart with upper and lower shadow. Technically, this pattern indicates a formation of high wave type candle pattern at the lows and this reflects a high volatility in the market. Normally, such high wave formation after a reasonable decline or near the important supports are considered as a bottom reversal post confirmations. Hence, a follow-through upmove from here could open a sustainable upside bounce for the short term”, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

“The crucial lower support of ascending trend line as per change in polarity principle remains intact around 16800-16900 levels and the Nifty retested this support during Thursday’s weakness and formed a higher low. The market has witnessed a decisive upside bounce from near this trend line support in the recent past. Hence, a sustainability of this support could be crucial to expect a reasonable upside bounce in the market ahead,” he added.

Key support, resistance levels for Nifty: “Till the time, the global uncertainty does not disappear, we are likely to have challenging markets where the volatility remains on the higher side. Now the budget is around the corner and hence, we do not expect any decisive move (on either side) for the next couple of days. Technically speaking, 16800 is considered to be a crucial level because it coincides with the 78.6% retracement of the recent up move as well as the trend line support,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd.

“Market has not only managed to hold it in the last couple of sessions but also had an excellent recovery to reclaim 17000 with some authority. Hence, as long as this support holds, we remain hopeful for some recovery from hereon. On the flip side, if market manages to recover, we don’t see it surpassing the sturdy wall of 17350 – 17500 before the budget. Whatever breakout has to happen (upwards or downwards), it is now likely to happen on or after the budget only. Till then one should expect a range bound movement and should focus on stock specific action,” Chavan added.

Nifty Call, PUT OI: Maximum Call open interest was seen at 17,400 strike with 64.60 lakh contracts, followed by 17,500 strike (59.57 lakh contracts), and 17,200 strike (44.82 lakh contracts). Maximum Put open interest was seen at 17,000 strike (56.34 lakh contracts), followed by 16,500 strike (44.87 lakh contracts), and 16,000 strike (44.86 lakh contracts).

Q3 Results Today: Larsen & Toubro, Dr Reddy’s Labs, Kotak Mahindra Bank, Britannia Industries, Vedanta, 3i Infotech, Aptus Value Housing Finance, Arvind SmartSpaces, Asahi India Glass, Atul, AU Small Finance Bank, Bajaj Healthcare, Bharat Electronics, Blue Dart Express, CARE Ratings, Central Bank of India, Chambal Fertilisers, Chemplast Sanmar, Crompton Greaves Consumer Electricals, Deepak Fertilisers, Dixon Technologies, Equitas Small Finance Bank, Happiest Minds Technologies, Karnataka Bank, Marico, Max Financial Services, Info Edge, Oberoi Realty, Suzlon Energy, Tata Coffee, United Breweries, UTI Asset Management Company, and Zenotech Laboratories will release their quarterly earnings on Friday (January 28).

FII and DII data: Foreign institutional investors (FIIs) offloaded shares worth Rs 6,266.75 crore, while domestic institutional investors (DIIs) net bought shares worth Rs 2,881.32 crore in the Indian equity market on Thursday (27 January), according to the provisional data available on the NSE.

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