Indian equity markets opened on a cautious note on Tuesday, with benchmark indices declining moderately amid fresh geopolitical concerns and persistent foreign fund selling. The BSE Sensex and NSE Nifty pared part of Monday's sharp rebound as investors turned wary of potential trade policy implications.

Market Performance

At 09:33 am, both indices were trading lower by approximately 0.2%, reflecting investor caution in early trade.

Despite the headline index pressure, market breadth remained positive, indicating selective buying interest across the broader market.

Tariff Concerns Impact Sentiment

The muted opening came after Trump announced that countries doing business with Iran would face a 25% tariff, reviving concerns around trade policy weaponization. This development particularly affects India, which has been among Iran's key trading partners in recent years. India exports items such as rice, tea, medicines and textiles to Iran, while importing dry fruits and chemicals from the country.

The announcement tempered the optimism from Monday's session, when markets had snapped a five-session losing streak on hopes of progress in India-US trade talks.

Sectoral and Stock Performance

Sectoral performance showed mixed trends in early trade. Energy, metals and PSU banking stocks provided some support to the market, while IT, auto and consumer durables stocks traded lower.

Top Nifty Gainers:

• ONGC
• Tech Mahindra
• Hindalco Industries
• HDFC Bank

Top Nifty Laggards:

• Larsen & Toubro
• Dr Reddy's Laboratories
• HCL Technologies
• Bharti Airtel

Volatility remained elevated with India VIX rising close to 2%, reflecting lingering nervousness after last week's sharp correction.

Institutional Flows

Institutional activity continued to be a key market driver, with contrasting flows from foreign and domestic investors.

Foreign institutional investors extended their selling streak to a sixth consecutive session, while domestic institutional investors continued providing market support, helping cushion the broader market impact.

Technical Outlook

Analysts indicate that Nifty's ability to hold above the 25,650-25,700 zone will be crucial in the near term following Monday's rebound. A sustained move above 25,800 could open the door for further recovery towards the 25,900-26,000 zone, while a slip below recent lows may revive downside pressure. With Q3 earnings underway and geopolitical developments in focus, participants expect stock-specific action to dominate in upcoming sessions.

The Indian stock market demonstrated remarkable resilience on Monday, January 12, staging a sharp rebound that saw benchmark indices recover from significant intraday losses. The recovery comes amid ongoing market volatility driven by Q3 earnings season and geopolitical developments, prompting technical analysts to identify specific opportunities for short-term traders.

Market Performance Overview

The trading session showcased the market's volatile nature, with dramatic swings characterizing the day's activity. The Sensex experienced a remarkable turnaround, jumping over 1,000 points from its daily low to close 300 points higher at 83,878. Similarly, the Nifty 50 gained 107 points, closing at 25,790 with a 0.42% increase.

While large-cap indices showed strength, mid and small-cap segments failed to participate in the recovery, with the BSE Midcap index dropping 0.41% and the Smallcap index declining 0.68%.

Technical Outlook and Market Levels

Technical analysis reveals key levels for the Nifty 50, with resistance positioned in the 26,000-26,100 range. On the support side, the index appears to have solid backing at 25,600-25,650 levels. Experts anticipate continued short-term volatility as markets navigate through the ongoing Q3 earnings season and evolving geopolitical situations.

Expert Stock Recommendations

Master Capital Services Picks

Vishnu Kant Upadhyay, AVP-Research and Advisory at Master Capital Services, has identified three technically strong stocks for short-term trading.

Reliance Industries shows early recovery signs after a sharp 10% correction from all-time highs. The stock has rebounded strongly from the confluence of key supports near the 200-day EMA and the 38.2% Fibonacci retracement level.

Varun Beverages (VBL) exhibits a strong bullish technical setup, consistently trading above the 21-day and 55-day EMA, indicating sustained short and medium-term strength. The stock has successfully formed a base at lower levels, with momentum indicators remaining supportive and MACD firmly in positive territory.

Bank of Maharashtra continues trading within a well-defined bullish channel, having decisively crossed above its key resistance zone with strong daily close confirmation. The breakout is supported by noticeable volume surge, indicating strong buyer participation.

Choice Equity Broking Recommendations

Hitesh Tailor, Technical Research Analyst at Choice Broking, has identified three additional opportunities for short-term traders.

Vedanta maintains a higher-high and higher-low formation, indicating strong bullish trend continuation. Trading around ₹627.35, the stock has formed a swing low above the 20-Day EMA with RSI at 71.53 remaining in rising trend.

Bank of Maharashtra (alternative view) exhibits improving strength with a gradual rounding bottom formation and clear higher high-higher low structure. Sustained volumes indicate accumulation with resistance at ₹64.80 decisively breached.

Chennai Petroleum Corporation has taken strong support near ₹786, aligned with the 200-Day EMA, indicating stability and potential trend reversal. The stock continues trading above the key 200-Day EMA with RSI at 39.68 rebounding from oversold zone.

Risk Management Considerations

Both experts emphasize the importance of disciplined risk management for short-term trading strategies. The recommended stocks feature well-defined stop-loss levels and realistic target prices based on technical analysis. Traders should maintain strict adherence to these levels given the anticipated market volatility in the coming weeks.