It has been a while that the has looked convincing as it did on Wednesday. There was no selling pressure at higher levels, and the Nifty ending at the day’s high will also give the bulls a lot of comfort.

Of course, by no means is the index or the market out of the woods yet. The Nifty may have ended close to the 23,200 mark, but the index is still a fair distance away from its 20-Day Moving Average, which is placed at the 23,350 levels, which also happens to be last Friday’s high and has been a barrier for the index nearly throughout the month of January.

The broader markets also staged a rebound on Wednesday, with the beaten down names staging a comeback. Both Netweb and Anant Raj, which have halved from their peak, ended at a 10% upper circuit after clarifying that DeepSeek will be an opportunity for their business and not a threat. Newgen Software, which was down 45% from its peak after yesterday’s close, also ended 10% higher.

Whether traders would use this bounce to lighten their positions going into the Union Budget on Saturday or build on a sustained recovery in anticipation of some positive announcements remains to be seen.

A lot of this recovery will now hinge on multiple factors emerging out of the US overnight. The US Federal Reserve will come out with its policy decision later tonight and while a status quo policy is mostly priced in, commentary from Jerome Powell on future rate cuts and the impact of Donald Trump will be a key monitorable.

Adding to the list of factors overnight include earnings from three of the “magnificent seven” big tech companies – Microsoft, Meta and Tesla, all of whom will be reporting results after the bell. Analysts expect growth of these “magnificent seven” stocks to be the slowest in two years.

Its not as if our own markets are devoid of any earnings action. As many as five Nifty 50 companies – Adani Enterprises, Adani Ports, Bajaj Finserv, Bharat Electronics and L&T will be reporting results on Thursday, along with F&O stocks like Astral, Bank of Baroda, Biocon, CONCOR, Coromandel International, Dabur, GAIL, JSPL, Kalyan Jewellers, Dr. Lal Pathlabs, Max Healthcare, Navin Fluorine, Prestige Estates, PB Fintech and Shree Cement will be reporting results.

Rupak De of LKP Securities believes that although the sentiment has improved slightly, the weakness will persist as long as the Nifty remains below the 21-Day Exponential Moving Average. On the downside, 23,000 will act as an immediate support, while more strength will be seen once the index sustains above 23,200.

The negative chart patterns of lower tops and lower bottoms are still intact on the Nifty, said Nagaraj Shetti of HDFC Securities. A sustained move above 23,350 – 23,400 levels can probably negate this pattern and open more upside, he added.

Kotak Securities’ Shrikant Chouhan expects the pullback formation to continue as long as the Nifty remains above 23,000, which can take it back to the 20-DMA of 23,350. However, the sentiment will shift again if 23,000 is broken on the downside.

The Nifty Bank has been the outperformer over the last two trading sessions post the liquidity boost from the Reserve Bank of India and even after a point during the session when the index nearly turned negative, the recovery was swift and the index, similar to the Nifty, ended at the highest point of the day. Here too, levels of 49,300, where the 20-DMA is place, remain key to the index, followed by the next hurdle at 49,500.

Immediate support for the Nifty Bank is at 48,750, which will be a key level for any near-term correction, said Om Mehra of SAMCO Securities. On the upside, there is minor resistance at 49,650, and a decisive break above that can enhance the bullish outlook, opening up the index for further gains.

What Are The F&O Cues Indicating?

Short covering was seen in these stocks on Wednesday, meaning an increase in price but a decline in Open Interest:

Stock	Price Change	OI Change
HDFC Life	2.58%	-45.99%
Exide	2.80%	-45.35%
PI Industries	2.17%	-45.20%
LTTS	4.26%	-45.17%
Zydus Life	2.75%	-45%

Unwinding of long positions was seen in these stocks on Wednesday, meaning a decline in both price and Open Interest:

Stock	Price Change	OI Change
Mahanagar Gas	-1.62%	-71.40%
PNB	-1.63%	-58.45%
Bosch	-5.80%	-52.47%
Ambuja Cements	-3.97%	-42.19%
JSW Energy	-6.07%	-21.27%

Click here to read the list of stocks to watch out for ahead of Thursday’s trading session: