Market Ahead, January 7: Top factors that could guide markets today

A huge sell-off in the equity markets yesterday and a recovery in global markets overnight may prompt a rebound in domestic indices today. However, short-term risk from any new aggression on the US-Iran front remains intact.

A reports by Reuters that the government is likely to cut spending for the current fiscal year to curb deficit as it faces one of the biggest tax shortfalls in recent years is also expected to weigh on investor sentiment.

Apart from this, market participants will continue to follow the trajectory of the Rupee which plunged 13 paise on Monday to settle at 71.93 against the US currency. They will also be on the lookout for on any news flow regarding the upcoming Budget. Besides, investors will track stock-specific action, foreign fund flows, and global developments throughout the day for further cues.

Among individual stocks, TCS will remain in focus as the IT bellwether is set to postpone the announcement of its Q3 results from the earlier scheduled date of January 9. According to a Business Standard report, the firm is waiting until the Supreme Court hears its plea over the NCLAT’s order on the reinstatement of Cyrus Mistry.

Mood in the global markets calmed a little as the overnight session passed with no new escalation in the Middle East. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3 per cent, Japan’s Nikkei edged up 0.5 per cent, and South Korea was up 0.6 per cent. The Wall Street also ended in the black. The Dow rose 0.2 per cent, the S&P 500 gained 0.35 per cent, and the Nasdaq 0.6 per cent.

The SGX Nifty was also indicating a strong start for the domestic indices.

In commodities, oil surrendered some hefty gains as many doubted Iran would strike back in a way that would disrupt supplies, and its own crude exports. Brent crude futures receded to $68.91 a barrel.

Back home, the boiling tensions in the Middle East sent the benchmark S&P BSE Sensex below the 41,000-mark on Monday. The Sensex ended the day at 40,676.63 level, down 788 points. On the NSE, the Nifty50 closed at 11,993-mark. According to analysts, the Nifty has broken down from the symmetrical triangular pattern with a clear sell crossover in MACD. Hence, traders should look to sell for the target of 11,850 with stop-loss at 12,150.

Anand Rathi Shares and Stock Brokers recommends selling DLF for the target of Rs 203 with stop-loss at Rs 230.10.