Investor Cautiousness and IT Services Sector Projections
Investors remain cautious as the IT services sector is projected to have a weak earnings season. This projection is adding to the cautiousness of investors as they prepare for the opening of the benchmark Sensex and Nifty on January 3. Trends in the GIFT Nifty indicate a negative start for the broader index, with a loss of 70.5 points. On January 2, the BSE Sensex was down 380 points at 71,893, while the Nifty50 fell 76 points to 21,666. The daily charts show a bearish candlestick pattern with a long lower shadow, indicating some buying interest at lower levels. However, the smaller range movement of the past few sessions has been broken on the lower side, indicating a short-term reversal pattern.
Positive Chart Patterns and Confirming a Reversal
Despite this short-term weakness, positive chart patterns like higher tops and bottoms are still intact on the daily chart. The consolidation/weakness is in line with the formation of a new higher bottom of the sequence. The bottom reversal needs to be confirmed at the lows. The pivot point calculator indicates that the Nifty may get support at 19,322, followed by 19,292 and 19,242. On the upside, 19,421 can be the key resistance, followed by 19,452 and 19,502.
International Market Updates
Meanwhile, US markets saw little change in stock futures in overnight trading after the Nasdaq Composite registered its worst session since October. European stocks closed lower, erasing gains earlier in the session. Asian markets fell as they followed Wall Street’s lead, with the first trading day of the year seeing the Nasdaq Composite and the S&P 500 indexes tumble. Investors in Asia are also closely watching India’s factory activity data and oil prices following Iran’s deployment of a warship to the Red Sea, which has increased tensions in the region.
Bank Stocks, Transactions, and Gold Prices
In other news, Jefferies released a report stating that valuations of bank stocks look reasonable, with their price rise lagging that of the market and emerging-market financials in 2023. UPI transactions crossed the 100 billion mark in 2023, marking a 60 percent growth compared to 2022. The Reserve Bank of India (RBI) is expected to announce a new 10-year benchmark bond early next week. The Supreme Court is set to pronounce judgment on the Adani-Hindenburg case, and Trust Mutual Fund’s CIO suggests that though the Indian equity markets don’t appear exhausted, they do seem frothy. Avenue Supermarts reported a 17.19 percent increase in standalone revenue from operations for the quarter ended December 31, 2023. Finally, gold prices gained on Tuesday, boosted by expectations of an easing of monetary policy by the US Federal Reserve in 2024.
Analyst comment
Negative news: Investors remain cautious as the IT services sector is projected to have a weak earnings season. This projection is adding to the cautiousness of investors as they prepare for the opening of the benchmark Sensex and Nifty on January 3. Trends in the GIFT Nifty indicate a negative start for the broader index, with a loss of 70.5 points. On January 2, the BSE Sensex was down 380 points at 71,893, while the Nifty50 fell 76 points to 21,666. The daily charts show a bearish candlestick pattern with a long lower shadow, indicating some buying interest at lower levels. However, the smaller range movement of the past few sessions has been broken on the lower side, indicating a short-term reversal pattern.
As an analyst, the market is likely to experience a short-term decline due to cautiousness among investors and the anticipated weak earnings season in the IT services sector. However, positive chart patterns suggest potential for a rebound in the near future. Key support levels to watch are 19,322, 19,292, and 19,242, while key resistance levels are 19,421, 19,452, and 19,502. Global market trends and geopolitical tensions will also impact market performance.
