Sensex, Nifty poised for higher opening as Nifty 50 seeks to rebound from selling pressure

India's benchmark index, Nifty 50, is anticipated to open higher on Tuesday, aiming to recover from modest gains in the previous session, which saw a bout of selling pressure following another record high.

As of 8:14 am IST, GIFT Nifty was trading at 21,856.50, indicating that the NSE Nifty 50 is poised to open above its Monday close of 21,741.90.

“Wall Street remained closed for New Year’s Day, resuming 2024 trading on Tuesday. In contrast, Nifty experienced a fluctuating session in the previous trade, managing to conclude slightly above its starting point on the first trading day of the year. The predominant theme in the market was volatility, evident in Nifty's trading action. Looking ahead to Tuesday, the outlook indicates a lack of significant market movements." said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

"Nifty's options data suggests a trading range of 21,300-22,300, with the crucial resistance zone at 22,000. The technical analysis for Nifty reveals immediate upside targets at 22,000, with make-or-break support at 21,487,” Tapse added.

He also said that the market anticipates volatility, influenced by factors such as the surge in COVID-19 sub-variant JN.1 cases in India, FOMC minutes on January 4, and US NFP figures later in the week. Tapse also recommended to buy Nifty at the current market price with a stop at 21,301 and targets at 21,900/22,100, including aggressive targets at 22,500-22,750.

"Similarly, for Bank Nifty (48234), the suggestion is to buy at the current market price with a stop at 47,601 and targets at 48,636/49,000, with aggressive targets at 49,501-50,000. The highlighted stocks for intraday trading with an inter-week perspective are ADANI PORTS, BANK OF BARODA, COAL INDIA, ZEE ENTERTAINMENT, and TECH MAHINDRA. Additionally, the recommended stock to buy is ADANI PORTS (CMP 1048) with a stop at 951 and targets at 1109/1157, including aggressive targets at 1251, based on a momentum play strategy,” Tapse added.

In the broader Asian markets, slight declines were observed, influenced by mixed economic data from China. While official data indicated a contraction in manufacturing activity, a private-sector survey reported expansion. Wall Street remained closed on Monday in observance of the New Year holiday.

On the domestic front, the focus is on whether Nifty and BSE Sensex can sustain their upward momentum after succumbing to selling pressure on Monday following yet another record high.

Nagaraj Shetti, senior technical analyst at HDFC Securities, noted, "The market has started to exhibit high volatility around the new highs, which signal chances of a round of downward correction from the highs."

In 2023, the Nifty experienced a notable 20 per cent gain, fueled by faster-than-expected economic growth, consistent retail buying, and the return of foreign purchases amidst expectations of a U.S. rate cut. However, analysts led by Sanjeev Prasad of Kotak Institutional Equities caution that most of these factors have already been factored into stock prices.

Foreign institutional investors (FIIs) were net sellers of Indian shares worth 8.56 billion rupees (approximately $103 million) on Monday, while domestic institutional investors (DIIs) bought a net 4.10 billion rupees worth of stocks, according to exchange data.

Stocks to watch:

1. Bharti Airtel: Its unit, Bharti Airtel Services, is set to acquire a 97.1 per cent stake in fellow group company Beetel Teletech for 6.69 billion rupees.
2. TVS Motor: The two-wheeler manufacturer reported a robust 25 per cent year-on-year sales growth in December.
3. Kernex Microsystems: Its joint venture secured an order worth 1.09 billion rupees from South Central Railway for signaling and telecommunications works.
4. Coal India: The coal production giant witnessed an 8.2 per cent year-on-year increase in coal production for the month of December.
5. HUL: Hindustan Unilever Ltd on Monday said it has received Goods and Services Tax demands and penalties totalling Rs 447.5 crore from the authorities.