TCS will drive the Nifty Direction Today
The direction for the markets as the week wraps up will heavily depend on how investors react to the quarterly earnings of India’s largest IT services firm, TCS. The company’s performance often sets the tone for the IT sector, influencing five other IT firms listed on the Nifty 50 index.
Thursday’s trading session brought disappointment for the bulls as the market witnessed a broad-based sell-off. Continuing its corrective phase, the Nifty 50 index slipped below key support levels, shedding over half a percent. Both the Nifty and Sensex recorded nearly 1% losses, leaving investors worried about the near-term market direction.
After showing signs of recovery on Wednesday, the Nifty 50 resumed its downtrend on Thursday, closing at 23,526.50—near its day’s low. The session started on a negative note and saw further weakness as the day progressed. Intraday attempts to recover were met with selling pressure, pushing the index to close lower.
Sectoral performance mirrored the broader market’s weakness. Realty, energy, and IT emerged as the worst performers, with broader indices such as the Nifty Midcap index also facing significant selling pressure. The Midcap index recorded its fourth loss in the past five sessions, signaling broader market weakness.
Focus on TCS Results
The direction for the markets as the week wraps up will heavily depend on how investors react to the quarterly earnings of India’s largest IT services firm, TCS. The company’s performance often sets the tone for the IT sector, influencing five other IT firms listed on the Nifty 50 index.
TCS reported December quarter results that aligned with market expectations on most metrics. Revenue for the quarter stood at ₹63,973 crore, reflecting a modest 0.4% decline compared to the September quarter. In US dollar terms, revenue was $7,539 million, slightly below the estimated $7,626 million. Growth in constant currency terms remained flat, against an expected 0.2% increase.
Aside from TCS, other key results influencing the market include Ireda and Tata Elxsi, both of which reported their earnings after market hours on Thursday. Another IT heavyweight, HCLTech, is set to announce its results on Monday, adding further anticipation for the sector’s performance.
Foreign and Domestic Investor Activity
On Thursday, foreign institutional investors (FIIs) continued their selling spree in the cash market, while domestic institutional investors (DIIs) remained net buyers. This tug-of-war between foreign and domestic investors has been a defining theme for the week, during which the Nifty has already declined by over 2%.
Nifty 50 Technical Outlook For Friday
The technical charts for the Nifty 50 suggest that the index is precariously placed near a critical support level of 23,500. Nagaraj Shetti of HDFC Securities warned that a decisive break below this support could lead to further downside toward 23,260 or even lower in the short term. On the upside, immediate resistance lies at 23,700.
Om Mehra of SAMCO Securities noted that the index is struggling to stage a meaningful recovery, with daily charts forming a red candle that negates the bullish implications of the previous hammer pattern. The RSI (Relative Strength Index) remains subdued, staying below the key level of 40, while the hourly chart reflects a persistent bearish bias.
Vatsal Bhuva of LKP Securities emphasized caution, pointing out that the index has closed below its 200-day EMA, forming a bearish candlestick. He suggested a sell-on-rise strategy if the Nifty breaches 23,500 decisively. However, if this support holds, the market may enter a consolidation phase.
For the short term, 23,500 serves as a crucial support level, while resistance at 23,800 may limit any upward movement.
Nifty Bank Technical Outlook For Friday
The Nifty Bank index ended Thursday’s session at 49,503.50, declining by 0.67%. The index has broken its weekly support and the rising trendline, indicating continued weakness. However, consecutive hammer patterns on the daily chart and an oversold RSI signal the possibility of a relief rally.
Om Mehra noted that any reversal would depend on the index holding its critical support at 49,000. If this level is breached, the chances of a relief rally will diminish significantly.
Stocks to Watch Today
- TCS: The IT giant’s revenue for the December quarter was ₹63,973 crore, down 0.4% from the previous quarter. The market’s reaction to its earnings could set the tone for the IT sector.
- Ireda: The company reported a 26.8% YoY rise in net profit to ₹425.4 crore, supported by a 39% increase in NII to ₹622.3 crore.
- Adani Total Gas: Domestic gas allocation has been revised upwards by 20%, effective January 16, 2025.
- Mahanagar Gas: Similarly, domestic gas allocation has been raised by 26%, effective January 16.
- Mazagon Dock: Delivered its sixth Scorpene-class submarine, Vaghsheer, to the Indian Navy.
- Polyplex Corporation: Announced an investment of ₹558 crore in a new BOPET film plant.
- Tata Elxsi: Reported a 13.3% sequential decline in net profit to ₹199 crore for the December quarter.
As markets navigate the ongoing correction, the quarterly earnings of key companies like TCS, Tata Elxsi, and Ireda are likely to influence sentiment. While technical indicators suggest caution, the possibility of a relief rally cannot be ruled out if support levels hold. Investors should closely monitor global cues, FII/DII activity, and sector-specific trends as they plan their next moves.
