Sensex snaps 3-day losing streak, 21,500 crucial for Nifty as banks deliver Q3 results
Strong global cues prompted domestic frontline indices – BSE Sensex and NSE Nifty 50 snap three-day losing streak on January 19 led by auto and metal stocks. Analysts, however, warn that the rally is prone to fizzle out amid the corporate earnings season. They suggested investors to keenly watch out 21,500 levels for Nifty as any breach could send markets into a tailspin.
At close, Sensex was up 0.7 percent to 71,683, while NSE Nifty 50 rose 0.7 percent to 21,622 on January 19.
“It is not a very decisive pullback. Friday’s recovery comes after 3 days of decline and that is quite normal,” said Ajit Mishra, Senior Vice President- Technical Research at Religare Broking. He pointed out that 21,700-21,850 could be the next resistance levels for Nifty.
On the other hand, Raja Venkataraman, Co-Founder at Neotrader noted that 21,500 would be a crucial level for investors to watch out. “Any breach below this level could send Nifty down to 21,800. But if it sustained above 21,500, it could rise up to 22,200,” he told Moneycontrol.
Typically, the month of January is usually a volatile one, explained markets experts as heavy newsflow around India Inc’s December quarter performance and global rejigs keep markets volatile. Hence, going forward, volatility is likely to remain on the higher side.
Banks – the spoiler of bull sentiment; more pain for Bank Nifty ahead?
Currently, analysts said that the main spoiler of bull market sentiment has been the banking pack. HDFC Bank’s Q3 results showed that the industry could be seeing a strain on margins due to repricing of deposits for sometime. Moreover, sluggish deposit growth also kept investors sentiment bogged down.
As financial services sector command the highest weightage in benchmark Nifty (around 37 percent), any weakness in related-stocks could keep it subdued.
“Once banks make a recovery, we can consider that there could be a trend reversal. But, we expect Bank Nifty to remain rangebound for now as companies like ICICI Bank and Kotak Mahindra Bank are yet to announce their Q3 financials,” said Mishra of Religare Broking. He added that 45,300 would act as a key support for Bank Nifty and in case selling pressure persists, the next level to eye for is 44,600.
Meanwhile, analysts at ICICI Securities chalked out 46,000 as an anchor point for Bank Nifty going ahead.
Global picture faltering; prospect of imminent rate cuts diminishing
As things back home is expected to remain volatile, the global picture is not well primed too.
Overseas, the US markets closed higher overnight led by technology stocks. But, the 10-year treasury yields continued to remain above 4 percent-mark. The yields continued to remain firm after jobs data remained solid, diminishing expectations for imminent rate cuts from the US Federal Reserve.
The initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 187,000 for the week ended 13th January, the lowest level since September 2022.
As a result, the US dollar climbed for fifth straight session on Thursday after fresh economic data from US signaled resilience in the economy, lowering market expectations of rate cut in March by US Federal Reserve.
Hence, market consensus rested that January 19’s uptrend is too early to celebrate and near-term overhangs is expected to keep equities rangebound in the next few sessions.
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