Indian Markets Open Lower on F&O Expiry Day

Indian equities experienced a weak start on the F&O expiry day, following a lackluster close in the previous trading session. The Nifty index opened down by 0.21 percent, or 49.65 points, settling at 23,639.3. Meanwhile, the Sensex declined by 0.28 percent, or 215.93 points, to reach 77,932.56.

The broader markets mirrored this weakness, with the Bank Nifty index also seeing a decline of 0.4 percent.

From a sectoral perspective, the trading atmosphere was largely negative, with most indices in the red. Only the auto and private bank sectors managed to stay afloat, experiencing minor gains. On the other hand, sectors such as Realty, Oil & Gas, and PSU Bank faced significant losses.

In anticipation of TCS’s Q3 results, which are set to be announced later today, the Nifty IT index experienced some selling pressure. Market analysts indicate that the outcomes from TCS’s results, coupled with U.S. Non-Farm Payroll data expected on Friday, will be crucial for market sentiment.

Prashanth Tapse, Senior VP of Research at Mehta Equities, emphasized the importance of these upcoming results in shaping market reactions.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out that Foreign Institutional Investors (FIIs) have sold equities worth Rs 10,419 crores in January alone. With the dollar index standing at 109 and the 10-year bond yield at 4.67 percent, it is likely that FIIs will continue this selling trend, putting downward pressure on the market in the short term.

As the Q3 results season begins today, investor reactions to these earnings will be significant. The results from TCS are expected to provide insights into the future performance of the IT sector, buoyed by the strength of the U.S. economy and a weakening rupee, which may serve as potential advantages for this segment.

Technical Analysis

Anand James, Chief Market Strategist at Geojit Financial Services, noted that the downside pressures have eased as per expectations without breaching the 23,400 mark yesterday. Although the recent pullback did not generate much momentum, signals such as the inside bar and hammer patterns formed in the past two days suggest the possibility of a future upward movement, targeting levels of 23,900 or 24,000.

However, a push above 23,752 will be necessary for confirmation of this upward trend, with downside indicators positioned around 23,630 or 23,570. If a decisive fall below the 23,263 mark occurs, it might take time to fully materialize, with major support levels identified at 23,000 and 22,260.

Asian Market Overview

During Thursday’s trading session, most Asian markets reported declines amid growing speculation that the U.S. Federal Reserve may adopt a less aggressive approach regarding interest rate cuts this year. Notably, the Federal Reserve's December meeting minutes underscored a hawkish outlook on rates.

Japan's Nikkei dropped by over 1 percent, while Singapore's Straits Times also showed a decrease. In contrast, Hong Kong's Hang Seng index managed to gain mildly.

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