Trade Setup for January 9: Nifty bulls makes strong recovery; all eyes on TCS results

The Nifty 50 index saw a strong recovery on January 8, following a significant dip earlier in the session. After initially opening positively, the index experienced a sharp pullback but managed to close just 19 points lower at 23,689. Despite weak global cues and stronger-than-expected US jobs data, which tempered hopes of an early rate cut by the Federal Reserve, the bulls found comfort in defending the 23,500 support level.

This support holds promise for the bulls, as the index hasn't fallen below this crucial level, providing some confidence for the upcoming days. While the market is not entirely out of the woods, the defense of lower levels is encouraging.

In the positive news for the market, stocks like Reliance Industries and IT companies provided some relief, with Nifty IT rebounding 2% from its lows. Shares of Reliance gained 2%, bolstered by positive brokerage notes, including a target of up to 36% upside from current levels. The company had underperformed in 2024 due to concerns about its retail business and earnings growth but has shown signs of recovery.

Nifty 50's options contracts will see their weekly expiry on Thursday, coinciding with the start of the December quarter earnings season. Tata Consultancy Services (TCS) will lead the earnings reports, with expectations that its revenue will be impacted by furloughs and client-specific challenges. However, its EBIT margin could improve due to improved talent development, training, and operational efficiency. Rising crude prices also led to buying interest in upstream oil and gas companies.

The US markets will be closed on Thursday due to the National Day holiday, meaning Indian markets are expected to remain range-bound, with stock and sector-specific movements linked to the earnings season.

Foreign and Domestic Institutional Flows On January 8, foreign institutional investors (FIIs) were net sellers, offloading ₹3,362 crore in equities, while domestic institutional investors (DIIs) bought ₹2,716 crore worth of equities.

Technical Outlook: Nifty 50 Nifty 50's short-term trend remains weak, according to Nagaraj Shetti of HDFC Securities, though the recent recovery from near 23,500 suggests potential for an upside bounce in the coming sessions. A sustained move above 23,800 could signal an upward move, with immediate support at 23,496.

LKP Securities' Vatsal Bhuva notes that Nifty is currently trading within a range of 23,500 to 24,200. A hammer candlestick pattern formed on the daily chart strengthens the 23,500 support level. A move below this level could intensify selling pressure, while a close above 24,000 may signal a rally toward 24,500.

Bank Nifty Outlook The Bank Nifty index closed lower at 49,835, down 0.73%, breaking below the key support level of 49,964. According to Om Mehra of SAMCO Securities, if the index sustains above 50,200, a relief rally could follow. The immediate support is at 49,450.

F&O Indicators Nifty 50's January futures added 2.2% in open interest, trading at a premium of 92.4 points. Similarly, Nifty Bank's January futures saw a 2.4% increase in open interest. The Nifty 50's Put-Call Ratio stands at 0.83.

Stocks to Watch for January 9

BHEL: Commissions two units of the 6X170 MW Punatsangchhu-II Hydroelectric Project in Bhutan.

Manappuram Finance: Shares in focus after RBI lifts restrictions on Asirvad MicroFinance and DMI Finance, though the stock is in the F&O ban.

Lupin: Receives Establishment Inspection Report from the US FDA for its Pithampur unit-1, with a VAI classification.

MOIL: Faces a penalty of ₹16.77 crore for excess production at the Tirodi Mine.

Man Industries: CFO Sanjay Kumar Agrawal resigns with effect from January 8.

Disclaimer: The views and investment tips expressed are solely those of the respective experts. Always consult a certified professional before making any investment decisions.