Trade Setup for January 24: Nifty's breakout above 23,400 crucial to shift from bearish to bullish

The Nifty 50 index has shown signs of recovery, bouncing back from lower levels, and analysts suggest it could gradually climb towards the upper range of 23,400 in the near term.

On Thursday, during the weekly expiry, Nifty began on a weak note, dipping initially but gaining traction within the first hour to reach near 23,250. However, the momentum waned in the latter half, with the index staying range-bound before closing 50 points higher at 23,205, supported by gains in UltraTech Cement, Mahindra & Mahindra, and Sun Pharma.

Broader markets also witnessed buying after declines in the previous sessions. The Midcap index surged by 985 points, closing at 54,099, fueled by strong performances in midcap IT stocks like Coforge, Persistent Systems, and Zensar Technologies.

Coforge: Shares rose 12% after reporting robust December quarter revenues, announcing a dividend, and an acquisition.

Persistent Systems: The stock gained over 12% as its quarterly results met market expectations.

Zensar Technologies: Shares jumped 15%, hitting an all-time high, thanks to strong order books and revenue growth.

Additionally, Stallion India Fluorochemicals made a strong debut, listing at ₹120, a 33% premium over its IPO price of ₹90, despite market volatility.

Technical Outlook

Analysts suggest Nifty needs a decisive breakout above 23,400 to shift from bearish to bullish. Immediate support is seen at 23,000.

Nagaraj Shetti (HDFC Securities): A move above 23,400 could renew buying interest.

Om Mehra (SAMCO Securities): Sustaining above 23,400 is critical to confirm a bullish trend shift.

Rupak De (LKP Securities): Selling pressure persists unless Nifty crosses the 50 EMA at 23,400.

Technically, Nifty's reversal formation on daily charts suggests potential for further upside, with resistance around 23,400-23,450 and support at 23,100-22,950.

Nifty Bank Performance

The Nifty Bank index closed at 48,589, down 0.28%. It remains range-bound near its 9 EMA, with key levels at 48,750 (upside breakout) and 48,250 (downside shift).

Investor Focus

Markets will keep an eye on upcoming results from companies like JSW Steel, Laurus Labs, IndiGo, and others. Foreign investors were net sellers in Thursday’s cash market, while domestic investors remained net buyers.

Key Takeaway

To maintain momentum, Nifty must decisively cross 23,400, which could open doors for bullish sentiment and renewed buying.