Trade Setup for January 13: Nifty faces more pressure; hovers near key support zones

The Indian equity markets extended their losing streak on Friday, with the Nifty 50 index closing 95 points lower at 23,431. This marked the third consecutive session of decline, reflecting heightened volatility and bearish sentiment. The index opened on a positive note, buoyed by early optimism, but quickly succumbed to selling pressure, erasing gains and ending near the day’s lows. The downward trend also pushed the Nifty below its immediate support level of 23,500 and the critical 10-day exponential moving average (EMA), signaling further weakness.

Market Recap

The broader market mirrored the bearish mood, with both the Sensex and Nifty 50 registering their steepest weekly declines in a month, each losing around 2%. The Midcap Index fared even worse, plummeting nearly 6% in its largest weekly fall in over two months. Out of the 50 Nifty constituents, 36 closed in the red.

Among the top losers were Shriram Finance, Trent, and NTPC, while select IT stocks emerged as notable gainers. Tata Consultancy Services (TCS) led the charge, surging by 5.67% on the back of robust December quarter earnings. Other IT heavyweights, including HCL Technologies, Wipro, Tech Mahindra, and Infosys, also posted gains, benefiting from sector-wide momentum.

Technical Breakdown

The Nifty 50’s decisive break below 23,500 places it precariously close to its critical support zone between 23,350 and 23,270. Analysts suggest that any breach of this level could accelerate the decline, with the next significant support levels at 23,260 and 23,000. On the upside, the index faces immediate resistance at 23,550–23,600, with a more formidable barrier at 23,700.

Momentum indicators like the Relative Strength Index (RSI) remain in a negative crossover, signaling weak market sentiment. The index’s position below the 50-day EMA reinforces the prevailing bearish trend, leaving little room for optimism in the short term.

The Bank Nifty index also struggled, closing at 48,734.15, down 1.55% for the day and losing 4.42% over the week. Efforts to reclaim the psychological 50,000 mark failed, with the index falling significantly below this critical level. Analysts warn that further downside could push the index toward 48,000 and 47,500. For any meaningful recovery, the Bank Nifty must decisively breach and sustain above the 50,000 mark with at least two consecutive closes.

Sectoral and Broader Market Performance

While the overall market sentiment remained subdued, the IT sector shone as a rare bright spot. TCS’s stellar performance, bolstered by upbeat earnings and optimistic commentary, lifted other IT stocks. TCS recorded its largest single-day gain in six months, closing at ₹4,265.55. Analysts remain bullish on the stock, with consensus targets indicating a potential upside of over 12%.

Other IT majors, including HCL Technologies, Wipro, Tech Mahindra, and Infosys, also contributed to the sector’s outperformance. However, this strength was insufficient to offset the widespread declines in other sectors, particularly midcaps, which bore the brunt of selling pressure. Stocks like Kalyan Jewellers, PB Fintech, Paytm, and IREDA were among the biggest losers in the broader market.

Global and Domestic Influences

The Indian market’s weak performance was exacerbated by global cues, particularly the sell-off in US markets. On Friday, Wall Street’s main indices posted their second consecutive week of losses, with the S&P 500 erasing its 2025 gains. A stronger-than-expected US jobs report reignited inflation fears, raising concerns that the Federal Reserve may maintain a cautious stance on interest rate cuts this year.

Foreign Institutional Investors (FIIs) continued their selling spree on Friday, further pressuring the market. Domestic Institutional Investors (DIIs), however, remained net buyers, offering some relief amidst the turmoil.

Outlook and Key Triggers

The coming week holds several critical events that could influence market direction. On the corporate front, earnings reports from HCL Technologies, Reliance Industries, Infosys, Axis Bank, and Wipro are eagerly awaited. Macro data, including Consumer Price Index (CPI) and Wholesale Price Index (WPI) inflation figures, will also play a pivotal role in shaping investor sentiment.

Technically, analysts suggest exercising caution as the Nifty hovers near key support zones. Nagaraj Shetti of HDFC Securities advises closely monitoring the 23,260–23,000 levels, with resistance at 23,600. Om Mehra of SAMCO Securities highlights the importance of holding above 23,263 to prevent a deeper slide, while Rupak De of LKP Securities emphasizes the need to reclaim the 50 EMA to counter the bearish trend.

Summing up

With the Nifty 50 below crucial technical levels and global market headwinds adding pressure, traders are advised to remain cautious. The focus will remain on corporate earnings, macroeconomic indicators, and global cues to gauge the market’s next move. Until the index clears key resistance levels, the near-term outlook appears challenging, with a continued bias toward the downside.