Market

Ahead of Market: 12 things that will decide stock action on Wednesday

NEW DELHI: Domestic equity indices fell for the second straight session on Tuesday and ended in the red amid selling pressure in private bank and IT counters. Economic relief measures announced by finance minister Nirmala Sitharaman on Monday failed to boost investor sentiments. Though Nifty tried to move towards the 15,850 level during the day, it witnessed pressure at higher levels and ended the day below the crucial 15,750 mark.

Nifty moved in a range of 112 points throughout the day and formed a bearish candle on the daily chart. Analysts said Nifty may correct more if it fails to hold the 15,700 level in the coming days.

Here’s how analysts read the market pulse:

Mazhar Mohammad of Chartviewindia.in, said, Nifty closing below 15,700 level will be considered a sign of weakness. “If the bulls manage to defend the 15,700 level on a closing basis on Wednesday, chances of a breakout above 15,900 level will arise. In that scenario, a higher target would be present in the zone between 16,100 and 16,300 levels,” he said.

Aditya Agarwala, Senior Technical Analyst, YES Securities, said, a sustained trade above 15,720 level can take the index to levels of 15,835-15,900. “A breakdown from the key support of 15,720-15,700 could extend the profit booking, dragging the index lower to 15,670-15,600 levels,” he said.

That said, here’s a look at what some of the key indicators are suggesting for Wednesday’s action:

Wall Street hits new peaks
The S&P 500 and Nasdaq Composite indices hit record highs on Tuesday while investors looked to consumer confidence data against the backdrop of rising inflation and a spike in Covid-19 cases in Asia. The Dow Jones Industrial Average rose 101.37 points, or 0.30%, to 34,384.64. The S&P 500 gained 6.23 points, or 0.15%, to 4,296.84, after hitting a record high of 4,299.80. The Nasdaq Composite gained 14.25 points, or 0.10%, to 14,514.76, having clocked an all-time high of 14,523.34.

European shares move higher
European stocks, as measured by the pan-European STOXX 600 index, rose 0.6 per cent, helped by a jump in industrial, financial and mining stocks, sectors set to benefit from economic improvements. Optimism around a steady recovery has put Europe’s benchmark on course for its fifth straight month of gains.

Germany’s DAX added 1 per cent, grinding higher after data showed an easing of Germany’s annual consumer price inflation in June. The reading of 2.1 per cent was still above the European Central Bank’s target of close to but below 2 per cent. Investors have been keeping an eye on inflation figures and what they may mean for continued central bank stimulus.

Tech View: If Nifty50 slips below 15,700, it may give the bears an upper hand
Analysts said holding above the 15,700 level is a must for the index to avoid a correction. The key resistance at 15,900 level will continue to pose as near-term hurdle, they said.

Check out the candlestick formations in the latest trading sessions

ET CONTRIBUTORS

F&O: Nifty’s immediate range seen between 15,600 and 16,000 levels
India VIX fell 2.97 per cent from 13.40 to 13 level. The fear gauge failed to move above 16-16.50 zone in the last three weeks and hovered near the lowest level of last 17 months. Lower volatility indicates an overall bullish market bias, but a small bounce in VIX can give some volatile cues to the market.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Tuesday showed bullish trade setup on the counters of Bank of Baroda,

, Tata Motors, Sadbhav Engineering, Marico, Indraprastha Gas, Archies, Granules India, Fortis Healthcare, Dhani Services, Birla Tyres, United Breweries, Escorts, Damodar Industries, InfoBeans Tech, Prestige Estates, Tata Elxsi, Sundaram Finance Holdings, KCP Sugar, Ajanta Pharma, MindTree, Golden Tobacco, Om Infra, The Investment Trust, Force Motors, Apollo Pipes, Aaron Industries, Greenlam Industries and Kennametal India.

The MACD is known for signalling trend reversals in traded securities or indices. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of the security may see an upward movement and vice versa.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Reliance Communication, Suzlon Energy, HDFC Life Insurance, Indian Bank, Infibeam Avenues, SBI Life Insurance, Future Retail, Kiri Industries,

, NOCIL, , Compuage Infocom, Radico Khaitan, , NCL Industries, Brigade Enterprises, L&T Infotech, Super Spinning, S Chand & Company, Polycab India, BF Investment, Tera Software, Dhunseri Ventures, Clariant Chemicals, , Kuantum Papers, Steel City Securities, Crisil, JBM Auto, Shree Cement, V Mart Retail and Revathi Equipment. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Tuesday’s most active stocks in value terms
RIL (Rs 2,620.54 crore), HDFC Life (Rs 2,125.43 crore), Kotak Bank (Rs 1,778.82 crore), SBI (Rs 944.43 crore), Infosys (Rs 925.27 crore), Tata Steel (Rs 918.30 crore), Adani Enterprises (Rs 849.73 crore), HDFC Bank (Rs 821.90 crore), Firstsource (Rs 816.59 crore) and Apollo Hospital (Rs 809.24 crore) were among the most active stocks on Dalal Street in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Tuesday’s most active stocks in volume terms
Reliance Communication (Shares traded: 40.49 crore), Vodafone Idea (Shares traded: 18.88 crore), PNB (Shares traded: 13.79 crore), NALCO (Shares traded: 10.05 crore), Indian Railway Finance Corporation (Shares traded: 10.00 crore), YES Bank (Shares traded: 7.70 crore), Bank of Baroda (Shares traded: 6.37 crore), BHEL (Shares traded: 6.07 crore), JP Power (Shares traded: 5.84 crore) and GMR Infra (Shares traded: 5.20 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Sequent Scientific, Firstsource, Sonata Software, Marico and Rattan India Infra witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure

Shyam Metalics and Energy witnessed strong selling pressure and hit a 52-week low, signalling bearish sentiment on the counters.

Sentiment meter favours bears

Overall, the market breadth remained in favour of the bears. As many as 165 stocks on the BSE500 index settled the day in the green, while 328 settled the day in the red.

Podcast: How to position yourself in the current phase of consolidation >>>

In the current phase of consolidation on Dalal Street, how should investors position themselves? We asked our expert. Also, what can investors expect from June auto sales data?

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