Trade Setup for January 30: All eyes hinges to the US Federal Reserve's policy decision

The Nifty's recovery on Wednesday was a refreshing change, showing resilience as there was no significant selling at higher levels. The index closed at the day’s high, providing bulls with some comfort. However, the market remains cautious, with the Nifty still below its 20-Day Moving Average (23,350), which has acted as a resistance point throughout January.

The broader markets saw a rebound, especially beaten-down stocks such as Netweb and Anant Raj, which surged 10% after clarifying that their business prospects with DeepSeek were positive. Similarly, Newgen Software, which had fallen 45% from its peak, gained 10%.

The recovery now hinges on key factors from the US. The Federal Reserve's policy decision, set to be announced tonight, is crucial. While a status quo policy is largely expected, market participants will be watching for any comments from Jerome Powell regarding future rate cuts and the impact of Donald Trump's activities.

Additionally, the earnings reports from three of the "magnificent seven" big tech companies—Microsoft, Meta, and Tesla—will be a major focus. Analysts predict that growth from these companies could slow to its lowest pace in two years.

Meanwhile, the Indian market is not devoid of action either. Five Nifty 50 companies—Adani Enterprises, Adani Ports, Bajaj Finserv, Bharat Electronics, and L&T—are set to report results on Thursday. Other F&O stocks like Astral, Bank of Baroda, Biocon, CONCOR, Coromandel International, Dabur, GAIL, JSPL, Kalyan Jewellers, Dr. Lal Pathlabs, Max Healthcare, Navin Fluorine, Prestige Estates, PB Fintech, and Shree Cement will also announce their earnings.

Rupak De from LKP Securities notes that sentiment has slightly improved, but weakness will persist as long as the Nifty stays below the 21-Day Exponential Moving Average. Immediate support is seen at 23,000, with more strength expected if the index holds above 23,200.

Nagaraj Shetti of HDFC Securities emphasizes that the negative chart patterns of lower tops and lower bottoms remain intact. A sustained move above the 23,350-23,400 range could negate this pattern and unlock more upside potential.

Shrikant Chouhan of Kotak Securities expects the pullback to continue as long as the Nifty remains above 23,000, with the 20-DMA of 23,350 acting as the next target. However, breaking below 23,000 could lead to a shift in sentiment.

The Nifty Bank has outperformed recently, bolstered by a liquidity boost from the RBI. Despite a brief dip during the session, the index bounced back strongly, closing at the day's peak. Key levels for the Nifty Bank include 49,300 (20-DMA), with 49,500 as the next resistance. Immediate support is at 48,750, and a break below this level could signal a short-term correction. On the upside, breaking 49,650 could lead to further gains.