Trade Setup for January 23: Nifty outlook remains weak even as short-term bounce unfolds

Nifty bulls mounted a sharp comeback on Thursday, snapping a three-session losing streak as the index closed above the 25,200 mark. After a highly volatile session that tested key technical levels, the benchmark rebounded 132 points to settle at 25,289.

The index opened with a strong upside gap of 187 points and remained firm for the first 45 minutes of trade. However, sentiment turned after 10 am, with the Nifty slipping as much as 267 points to an intraday low of 25,168.

Buying interest emerged precisely near the 200 DEMA placed at 25,164, triggering a sharp 164-point rebound in the final hour of trade.

Dr Reddy's Laboratories, Bharat Electronics and Adani Enterprises led the gains within the Nifty pack, while Eicher Motors, SBI Life and Titan ended the session as the top laggards amid selling pressure.

Barring Nifty Consumer Durables and Realty, all sectoral indices ended in positive territory. Media, PSU Banks and Pharma stocks outperformed, posting the strongest gains for the day.

The broader markets continued to outperform the benchmark, with the Nifty Midcap 100 rising 1.34% and the Nifty Smallcap 100 gaining 0.76%.

The Indian rupee snapped its losing streak, appreciating 6 paise against the US dollar to close at 91.63. The currency stabilised as global risk appetite improved following US President Donald Trump’s withdrawal of tariff threats against Europe.

On the macro front, global markets are expected to react to the US Q3 GDP data and monthly CPI inflation numbers scheduled to be released later on Thursday.

Siddhartha Khemka of Motilal Oswal said investor focus is likely to gradually shift towards the Union Budget 2026, slated to be presented on February 1, 2026. He added that markets will continue to track global cues, macroeconomic indicators and the ongoing quarterly earnings season.

Key companies set to announce results on Friday include JSW Steel, Shriram Finance, BPCL, Godrej Consumer Products, Cipla, MCX and Piramal Finance.

From a technical perspective, Nagaraj Shetti of HDFC Securities said the near-term trend remains weak, although a short-term bounce is unfolding.

He said that a sustained move above 25,500 could confirm a near-term bottom reversal, while renewed weakness could drag the index towards the 24,900-25,000 zone.

Nilesh Jain of Centrum Broking said a decisive breakout above the 100-DMA at 25,590 is crucial for a meaningful upside. On the downside, the 200-DMA near 25,130 continues to provide strong support.

Rupak De of LKP Securities expects the index to remain volatile in the near term, with resistance placed in the 25,480-25,500 range and support seen around 25,125.

Meanwhile, Nandish Shah of HDFC Securities pointed out that despite reclaiming over 500 points from the recent swing low of 24,919, the positional trend remains bearish as the Nifty continues to trade below all key moving averages.

He added that short-term resistance is capped at 25,450-25,500, while support has shifted higher to around 25,150, coinciding with the 200 DEMA.