Trade Setup Wednesday: Nifty remains in Sell-on-Rise mode as market braces for FY2025 GDP data.

The market on Wednesday will react to the first advanced GDP estimates for FY2025, which are pegged at 6.4%, aligning with expectations.

Despite a positive handover from Wall Street and favorable global cues, such as a cool-off in the US Dollar and a pause in the recovery of crude oil prices, the Nifty was unable to sustain its gains on Tuesday after a bounce from the day's lows. The index traded in a narrow range, ending the session in the green but closing nearly 100 points off its high and just 70 points above the day's low.

The 23,800 mark once again proved to be a barrier for the Nifty, reversing from 23,795. Though the index closed above 23,700, it remained below the critical 200-Day Moving Average (DMA), which is placed above 23,900. Analysts continue to view the market's structure as "sell-on-rise" as long as the Nifty remains below this key level.

In contrast to the Nifty, the broader markets performed relatively better, with the Midcap and Smallcap indices making modest recoveries. Stock-specific movements dominated the session, with ONGC being one of the top performers following a "high conviction outperform" upgrade by CLSA, while Zomato dropped after Jefferies downgraded it due to increasing competition in the Quick Commerce space.

All eyes are now on the upcoming FOMC minutes on Wednesday and the Non-Farm Payrolls data scheduled for Friday. Additionally, India’s earnings season for the Nifty 50 will kick off on January 9, starting with TCS, one of the largest IT firms.

On the domestic front, the market will react to the first advanced GDP estimate for FY2025, which stands at 6.4%, as expected.

Foreign institutional investors (FIIs) were net sellers in the cash market on Tuesday, while domestic institutional investors (DIIs) were net buyers, although both were in smaller quantities.

Technical View and Strategy: Jai Bala of cashthechaos.com anticipates that the Nifty may eventually break the low of 23,264. While the Nifty could trade sideways for a few days or break down immediately, any further upward movement could present an opportunity to sell.

Nagaraj Shetti of HDFC Securities believes the Nifty’s short-term trend remains weak with immediate resistance at 23,800. A breakout above this level could open the path for further upside. The December 31 low of 23,460 remains a critical support level.

The Nifty Bank regained the 50,000 mark on Tuesday after closing below it the previous day. However, it faced resistance near the 200-DMA around 50,500. The bulls' immediate task is to hold the 50,000 level as support.

Stock and F&O Insights: Fresh long positions were seen in stocks like ONGC, Oil India, Cyient, JK Cement, and Biocon. On the other hand, fresh short positions were observed in stocks such as PVR Inox, Kalyan Jewellers, Zomato, Varun Beverages, and Info Edge.

F&O data shows that Nifty 50 Call strikes between 23,700 and 24,000 have seen Open Interest addition, indicating a buildup of bullish positions. Meanwhile, Nifty 50 Put strikes between 23,200 and 23,700 have witnessed Open Interest addition, suggesting that traders are hedging for a potential downside.

Stocks to Watch:

M&M: Prices announced for the top variant of BE 6 and XEV 9e at ₹26.9 lakh and ₹30.5 lakh, respectively. Test drives to begin on January 14, with bookings starting February 14 and deliveries in March 2025.

Tata Steel: India production in Q3 up 6.2% to 5.68 MT, deliveries up 8.4% to 5.29 MT.

Sobha: Total sales value down 28.9% in Q3 to ₹1,388.6 crore, but average price realization up 16.5% YoY to ₹1,366.3 per square foot.

Berger Paints: Evaluating inorganic growth opportunities, no material event for disclosure.

Dr. Reddy's Laboratories: Sells manufacturing facility in Louisiana to Jaguar Labs Holdings.

RVNL: Signs MoU with Dubai’s GBH International Contracting LLC for civil infrastructure projects in GCC countries.

Exicom Tele-Systems: Partners with Mufin Green Infra to expand EV charging solutions in India.

Tata Technologies: Signs MoU with Telechips to innovate solutions for software-defined vehicles.

CESC: Issues LoA to set up a 150 MW Wind-Solar Hybrid Power Project with a greenshoe option for another 150 MW.

Jindal Worldwide: Announces issue of four bonus shares for every one share held.

The Nifty remains in "sell-on-rise" mode, and traders should watch for key levels around 23,800 for resistance and 23,460 for support. With earnings season beginning and global cues influencing market sentiment, stock-specific movements are expected to dominate, while broader market direction could be determined by the performance of key indices like Nifty Bank.