Rangebound action continued on Dalal Street on Tuesday as the market ended with modest gains after recovering from the lows of the day. Financials like Axis Bank, and the HDFC triplets were the major contributors to the recovery in the Nifty 50 index. Technology stocks ended higher ahead of their earnings next week while metals witnessed some profit booking.

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The market remains in a narrow range as investors await key data points from the FOMC meeting later tonight, the US Jobs data on Friday as well as a sustained breakout above levels of 18,265 - 18,300.

Shibani Sircar Kurian of Kotak Mahindra AMC expects some degree of volatility in the market in the near-term as valuations are a concern both on an absolute and relative basis. She expects earnings growth to be in the mid-teens during financial year 2024. "We believe that 2023 is going to be a year where movement of the market is largely going to be stock specific in nature and earnings growth is going to be the key driver," she said in an interaction with CNBC-TV18.

What do the charts suggest for Dalal Street?

Jai Bala of cashthechaos.com believes that the trend on the Nifty 50 remains negative as long as the index trades below the mark of 18,345. He cited the example of the pattern in December, where the market made a record high and yet ended negative for the month. Such a pattern has taken place nine times since 1997 and in eight out of those instances, the decline has been between 14.5-64 percent.

The Nifty Bank index is nearing a breakout level of 43,600, according to Kunal Shah of LKP Securities. Support on the lower end is seen at 43,000 while high call writing at levels of 44,000 makes it an upside resistance. "The momentum indicator RSI is in the strong buy zone which confirms the strength of the index," he said.

Here are key things to know about the market ahead of the January 04 trading session:

SGX Nifty

On Wednesday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty 50 index — declined 53 points or 0.29 percent to 18,253, thereby pointing to a negative opening for the market.

Global Markets

Markets in the Asia Pacific are trading mixed this morning ahead of the FOMC minutes. The Nikkei 225, in its first trading session for 2023 is down 1.1 percent, while the Topix is down 0.8 percent. On the other hand, the Kospi trades 0.8 percent higher while the Hang Seng is up close to a percent in early trading.

Benchmarks on Wall Street ended lower on Tuesday. The Nasdaq ended 0.8 percent lower while the Dow Jones ended flat. Shares of Tesla fell 12 percent overnight on delivery numbers that missed expectations.

What to expect on Dalal Street

Jai Bala sees extreme near-term supports for the Nifty 50 index at 18,080 and below that at 17,800 and at 17,500. He sees the probability of the market going down to be higher than the market going up.

Rupak De of LKP Securities says that the current Nifty 50 chart setup does not indicate any directional move. Over the short-term, he expects the index to move in the range of 17,950 - 18,400. A breakout on either side will confirm a directional move.

Key levels to watch out for

For the weekly options expiry of January 05, the 18,450 call of the Nifty 50 index added 11.5 lakh shares in Open Interest. Additionally, the 18,300 call added 8.2 lakh shares while the 18,400 call added 7.9 lakh shares.

On the downside, the 18,200 put added 36.3 lakh shares while the 18,150 put added 15.7 lakh shares in Open Interest.

No stocks are currently in the F&O ban.

FII/DII activity

Long build-up (Increase in price and Open Interest)

Short build-up (Decrease in price and Increase in Open Interest)

First Published:Jan 4, 2023 7:40 AM IST