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The Indian stock market experienced a significant downturn on Thursday, with the Nifty 50 index closing below 23,550, a level considered a key support point by several market analysts. This broad-based sell-off, extending a period of correction, saw the index lose nearly 1%, mirroring the performance of other major indices. The day's trading was characterized by a consistent downward trend, with any intraday attempts at recovery being met with immediate selling pressure. Most sectors followed suit, experiencing declines, with the realty, energy, and IT sectors emerging as the hardest hit. The Nifty Midcap index also recorded its fourth consecutive loss in five sessions, indicating broader market weakness and investor apprehension. The overall market sentiment appears to be heavily influenced by the anticipation of the quarterly results from Tata Consultancy Services (TCS), India's largest IT services company. The performance of TCS is expected to significantly influence not only its own stock price but also ripple through the wider IT sector, given the considerable weight of other IT companies within the Nifty 50 index.
TCS announced its December quarter results, which were largely in line with market expectations. While the revenue figures in Indian Rupees showed a slight decline of 0.4% compared to the previous quarter, the performance in US dollars fell short of CNBC-TV18's poll predictions. The constant currency growth was reported as flat, again missing the projected 0.2% growth. This slightly underwhelming performance, even if in line with broader estimates, may still impact investor sentiment negatively. Other companies reporting results also influenced the market, with Ireda and Tata Elxsi releasing their quarterly figures after market hours on Thursday and HCLTech scheduled for Monday. The mixed bag of results and the overall bearish trend dominated the market sentiment. Foreign institutional investors (FIIs) continued their net selling spree, while domestic investors acted as net buyers, indicating a divergence in investor perspectives and strategies. The week’s performance ended with the Nifty showing a decline of over 2%. This contributed to a negative overall perception within the market.
Market analysts offered varying perspectives on the Nifty 50's short-term outlook. Nagaraj Shetti of HDFC Securities highlighted the downside breakout below the 23,500 support level, suggesting further potential declines to around 23,260 or lower. He identified immediate resistance at 23,700. Conversely, Om Mehra of SAMCO Securities noted the ongoing struggles to recover, with the formation of a red candle following a hammer pattern negating any initial bullish signals. He highlighted a subdued Relative Strength Index (RSI) below 40, confirming the bearish bias. Vatsal Bhuva of LKP Securities pointed out the close slightly above the critical 23,500 support, forming a bearish candlestick below the 200-day Exponential Moving Average (EMA). He warned that a breach below 23,500 would strengthen the sell-on-rise strategy. Holding the support level, however, could lead to consolidation. All three analysts essentially agree on the crucial nature of the 23,500 support level for the near-term direction of the Nifty 50.
The Nifty Bank index also exhibited weakness, closing at 49,503.50, a decline of 0.67%. It had breached both its weekly support and a rising trendline on the weekly chart. Interestingly, despite the overall weakness, the formation of consecutive hammer candles on the daily chart, combined with an oversold RSI, suggests the possibility of a relief rally in the coming sessions. However, this potential reversal hinges on the index maintaining the critical 49,000 support level; failure to do so could signal further decline. In conclusion, the market's immediate future hinges on multiple factors: the long-term implications of the TCS results, the sustained selling pressure from FIIs, and the ability of the Nifty 50 and Nifty Bank to hold key support levels. The coming days will be crucial in determining whether this corrective phase will deepen or if a short-term recovery is possible.
Several other companies also announced their quarterly results, providing further insights into the overall performance of various sectors. Adani Total Gas reported a positive development with a 20% upward revision in its APM allocation, effective January 16, 2025. GAIL, the nodal agency, played a key role in this allocation. Similarly, another company saw a 26% increase in domestic gas allocations, indicating positive developments in the energy sector. Mazagon Dock Shipbuilders delivered the sixth Scorpene-class submarine to the Indian Navy, highlighting achievements in defense manufacturing. Polycab India announced plans to invest ₹558 crore in a new BOPET film plant, showing confidence in future growth and expansion. Finally, a company, unnamed in the original report, experienced a 13.3% quarter-on-quarter decline in net profit, highlighting the mixed performance across different sectors. The combined effect of these announcements, along with the broader market sentiment, creates a complex picture for short-term market projections.
Source: Trade Setup for January 10: Will TCS results take Nifty in the right direction?