Trade Setup: Three Dividend Stocks Are Intraday Picks; Important Factors To Influence Market Sentiment On Wednesday

The Indian stock market saw wild selling on January 23, with the Sensex and Nifty wiping their respective crucial marks of 71,000 and 21,500. The 50-scrip benchmark dropped by 333 points, or 1.54%, to settle at 21,238.80, while the 30-scrip benchmark plummeted by 1053.10 points, or 1.47%, to conclude at 70,370.55.

Speaking about the selloffs, Vinod Nair, Head of Research at Geojit Financial Services, said that significant selling in heavyweight industries, especially banking, was the primary cause of the market’s persistent slide today, which quickly turned negative despite a good start. The decrease in mid-caps and small-caps was greater than that of the major indexes. Investors booked profits from the recent surge as FIIs sold owing to factors including high valuation and inconsistent performance for the earnings season so far, in addition to the recent escalation of tensions in the Middle East and the Red Sea.

Today’s Day Trading Guide:
Nair said that moving ahead, the current earnings season would probably see stock-specific movements on the markets.

Furthermore, selling pressure persisted in the domestic markets today despite positive momentum in the global market, according to Prashanth Tapse, Senior VP (Research), Mehta Equities. This was primarily due to news that worries foreign investors (FIIs), as SEBI has drafted a paper to impose tighter ultimate beneficial ownership norms for overseas investors starting on February 1.

He went on to say that despite pressure to loosen the regulations before the deadline from a few offshore fund managers and international institutions, this had nonetheless happened. If this is accurate, funds failing to meet the regulations may sell more in the domestic markets within the following six months, for a total estimated value of between Rs 1.5 lakh crore and Rs 2 lakh crore. Heavy dumping by FIIs in the last few sessions has caused recent selloffs in Indian markets, and today’s decline may be the result of mixed earnings results so far and growing concerns about valuation.

Tape said, “There are signs that rate cuts in the US could not occur anytime soon due to inflation there, which is making investors uneasy about the present values. Despite the fact that India’s development prospects for the year seem promising, the slowdown in China and other emerging nations may cause demand to decline and encourage investors to reduce their future stock exposure.”

Regarding investors, “More pain ahead,” said Ajit Mishra, SVP of Technical Research at Religare Broking, “and the 20,800–21,000 zone may offer some support.” Majors in private banking were feeling the pressure earlier, but it is now trickling down to other industries and the wider indexes. Therefore, we advise monitoring leveraged positions and holding onto shorts as well.”

Technical Outlook: In the trade on January 24, Shiju Koothupalakkal, a technical analyst at Prabhudas Lilladher, predicts that Nifty will find support around 21,100 and resistance at 21,400. In contrast, Bank Nifty is anticipated to find resistance around 45,500 and support at 44,500.

A few days of consolidation have resulted in a decrease in Nifty 50, according to Rupak De, Senior Technical Analyst at LKP Securities. Nifty has fallen below the bottom end of the current consolidation zone. Since Nifty has finished at its lowest value on many days, it seems that the gloomy feeling is becoming stronger. Short-term weakness may continue, with support around 21,200; if this level is broken, the index might drop to 21,000 or below. As for the future, if the market stays below 21,500, it may remain a “sell on rise” situation.

According to Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, the market was characterized by a strong negative trend on Bank Nifty, with persistent selling pressure leading to a decrease throughout the course of the day. Given the present gloomy outlook, the mood points to a “sell on rise” approach. The 45,500 level represents immediate resistance, and any upward rise in the direction of this level is seen as a favorable time to think about liquidating stocks. Important support is built around 45,000–44,800 on the downside. If this support zone is broken, selling pressure would increase and the price might drop to around $44,000.

Stocks To Purchase Today: On Wednesday, Kothupalakkal advised purchasing three stocks. They are as follows:

– BUY BAJAJ AUTO cmp 7095.90 Target 7350 Stop Loss 6970

– BUY ZYDUS LIFE cmp 729 Target 757 Stop Loss 718

– PURCHASE NBCC cmp 105.25 Target 112 Stop Loss 102

These three companies have a history of paying out large dividends. Zydus Lifesciences paid out around 600% of its dividend, or Rs 6 per share, in 2023, while Bajaj Auto paid out up to 1400% of its dividend, or Rs 140 per share. NBCC, meanwhile, distributed a dividend of almost 54%, or Rs 0.54 per share.