Trade Setup for January 22: Nifty bulls look to HDFC Bank for direction amid market volatility

The Nifty 50 index dipped below the 23,000 mark during intra-day trading on Tuesday, a level not seen since June 2024, before closing at 23,025, down by 320 points. The Sensex also shed 1,230 points during the session, signaling intensified market pressure due to mixed quarterly earnings and persistent selling by foreign institutional investors (FIIs).

After an initial positive start, markets quickly reversed gains as volatility surged, ending at a six-month low. Broader indices, such as the Nifty Midcap100 and Smallcap100, saw sharper declines, losing over 2% each. Heavy sell-offs were witnessed across all sectors, with Nifty Realty plunging over 4%, fueled by concerns over RBI’s interest rate policy.

Among individual stocks, companies like Zomato, MCX, Oberoi Realty, and Dixon Technologies fell sharply by 10-15% due to adverse earnings reactions. Notably, investors remain cautious ahead of HDFC Bank's Q3 results, expected on Wednesday, alongside earnings announcements from HUL, BPCL, and midcap IT stocks like Coforge and Persistent Systems.

Global cues added to market anxiety as former U.S. President Donald Trump reiterated plans to impose steep tariffs on BRICS nations and warned against reducing reliance on the US dollar. Additionally, speculation about an interest rate hike by the Bank of Japan later this week has raised concerns over global borrowing costs.

Key Levels for Nifty and Nifty Bank

According to technical analysts:

Nifty 50:

Support: 22,800–22,700.

Resistance: 23,200 (immediate), 23,400 (major hurdle).

The broader downtrend continues with a pattern of lower highs and lows. A breach below 22,900 could extend losses.

Nifty Bank:

Closed at 48,570.90, down 1.58%.

Support: 47,898.

Resistance: 49,500.

Persisting below key moving averages, the index signals continued weakness.

Stocks to Watch

Tata Technologies: Net profit dipped 1% YoY to ₹168.6 crore, with revenue up 2% at ₹1,317 crore. Margins were steady at 17.8%.

IndiaMART: Reported a 47.6% jump in net profit YoY to ₹121 crore. Revenue rose 16% to ₹354.3 crore, with a notable 61.4% EBITDA growth.

JSW Group: Signed an MoU with the Maharashtra government for a ₹3-lakh crore investment across steel, renewable energy, and EV sectors.

Neuland Laboratories: Approved ₹342 crore in capital expenditures for capacity expansion in Telangana.

Cyient DLM: Net profit declined 40.8% YoY to ₹10.9 crore despite a 38% revenue rise to ₹444 crore.

Outlook

Analysts predict markets will remain under pressure in the near term due to persistent FPI selling and mixed quarterly results. The focus will be on HDFC Bank’s Q3 earnings to gauge market direction.

Disclaimer: Investors are advised to consult certified experts before making financial decisions.