Trade Setup for January 10: Nifty approaches key support at 23,500

The NSE Nifty 50 and Nifty Bank are currently positioned at critical technical junctures, with support and resistance levels shaping the market outlook. For the Nifty, immediate resistance is seen at the upper boundary of the falling channel, located between 23,700 and 23,750. On the downside, the key support level stands at 23,500. Investors and traders will closely watch these levels for potential price action in the coming sessions.

The market is likely to react to Tata Consultancy Services' (TCS) earnings announcement, which could set the tone for early Friday trades. With the Nifty down over 2% for the week, investors are keenly awaiting how the IT giant’s performance will impact market sentiment.

The TCS Earnings Impact: TCS, India's largest IT services company, reported its December quarter results, which largely met street expectations. The company posted a revenue of ₹63,973 crore, reflecting a slight decline of 0.4% compared to the September quarter. In US Dollar terms, TCS earned $7,539 million, which was marginally below the expected $7,626 million. The flat growth in constant currency terms, which was anticipated to be 0.2%, might affect investor sentiment.

TCS's performance is critical, not only for its own stock but also for the broader IT sector, with several other major IT companies such as HCLTech and Tata Elxsi reporting their results soon.

Market Outlook: According to Nagaraj Shetti of HDFC Securities, the Nifty is testing key support at the 23,500 level. A sustained break below this support could trigger further declines to around 23,260. Immediate resistance is seen at 23,700.

Om Mehra of SAMCO Securities noted that the Nifty's struggle to recover this week, combined with a bearish candle formation on the daily chart, points to continued weakness. The daily RSI remains subdued below 40, while the hourly chart suggests a negative bias.

Vatsal Bhuva from LKP Securities highlighted that while the Nifty closed above 23,500, it formed a bearish candlestick below the 200-day EMA, signaling caution. A break below this level could confirm a sell-on-rise strategy, with more downside expected. However, holding this support could result in consolidation.

Nifty Bank Performance: The Nifty Bank index closed at 49,503.50, down 0.67%. Despite breaching its weekly support and trendline, the index formed consecutive hammer candles on the daily chart and is in an oversold condition, suggesting a potential for a relief rally. However, a drop below 49,000 would invalidate this outlook.

Stocks to Watch on January 10:

TCS: Following its results, TCS's stock may react to the revenue dip and its modest growth in constant currency terms.

Ireda: The company reported a 26.8% year-on-year rise in net profit for the December quarter.

Adani Total Gas: A 20% increase in the allocation of APM gas starting January 16, 2025.

Mahanagar Gas: Gas allocations have been increased by 26% starting January 16.

Mazagon Dock: The company delivered the sixth Scorpene-class submarine, Vaghsheer, to the Indian Navy.

Polyplex Corporation: Announced a ₹558 crore investment in a new BOPET film plant.

Tata Elxsi: The company reported a 13.3% quarter-on-quarter decline in net profit for the December 2024 quarter.

Disclaimer: Always consult a certified expert before making investment decisions.