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

NEW DELHI: Nifty50 on Tuesday formed a bullish candle on the daily chart and made higher highs and higher lows for the second straight session. Analysts said the index may extend its rally if it manages to move above the crucial 16,700 level.

Here’s how analysts read the market pulse:

Mazhar Mohammad of Chartviewindia.in said the index is in a pullback mode, as it sustained above the recent low of 16,376 despite witnessing a sharp correction on August 20. “For a sustainable up move, a close above 16,700 level is required. Such a close can expand to 16,900-17,000,” he said.

Shrikant Chouhan of Kotak Securities said that the texture of the pullback rally indicates the index is likely to consolidate in the 16,500-16,720 range. “As long as the index trades above the 10-day SMA or 16,500 level, the uptrend wave is likely to continue up to 16,700-16,750 levels,” he said.

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

Wall Street at all-time highs

The S&P 500 and Nasdaq hit record highs on Tuesday, boosted by oil and travel-related stocks after a full U.S. approval of a COVID-19 vaccine raised hopes of a quicker economic recovery. At 10:34 a.m. ET, the Dow Jones Industrial Average rose 51.59 points, or 0.15 per cent, to 35,387.30, the S&P 500 gained 10.69 points, or 0.24 per cent, to 4,490.22 and the Nasdaq Composite gained 76.74 points, or 0.51 per cent, to 15,019.40.

European shares end flat

European stocks ended flat on Tuesday as investors held back from making big bets ahead of an update on U.S. monetary policy, even as data outlined a stronger-than-expected economic recovery in Germany. The pan-European STOXX 600 index closed largely unchanged at 471.79 points, following a selloff last week that knocked it off record levels.

Tech View: Nifty50 in pullback mode

Nifty50 on Tuesday formed a bullish candle on the daily scale and broke above its consolidation range of 16,350-600 on the upside. This was the second session when the index made a higher high-low formation. A move above 16,700 level could give the bulls an edge over the bears, analysts said.

F&O: Low VIX aiding bull sentiments

India VIX fell 3.60 per cent from 13.60 to 13.18 levels. A cool-down in volatility from the recent swing highs has again given a ‘buy on decline’ stance to the market and now VIX needs to hold below 12 level to get more buying interest in the broader market. Options data suggested a broader trading range between 16,400 and 16,800 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Vodafone Idea, GAIL (India), GMR Infrastructure, Adani Ports & SEZ, BLS International, Dish TV India, The New India Assurance, Cipla, Au Small Finance Bank, Lasa Supergenerics, Info Edge (India), Balrampur Chini, Oil India, Dhampur Sugar, Vaishali Pharma, Grindwell Norton, Torrent Pharma, Bombay Burmah, Palred Technologies, Technocraft Industries, Amrutanjan Health Care, Almondz Global and Welspun Investments.

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 Power Grid Corpo, Bharti Airtel, KPIT Technologies, ICICI Pru Life, Steel ExchangeIndia, UTI AMC, Goldiam International, Vinyl Chemicals, HDFC AMC, HB Stockholding, Bajaj Holdings, Accuracy Shipping, Repro India and SMS Lifesciences Industries. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Tata Steel (Rs 2464.67 crore), Bajaj Finserv (Rs 2058.11 crore), Bajaj Finance (Rs 1816.32 crore), HDFC Bank (Rs 1424.72 crore), Infosys (Rs 1315.19 crore), RIL (Rs 1190.51 crore), Aptus Value Housing Finance India (Rs 1120.31 crore), Tata Motors (Rs 1035.20 crore), MindTree (Rs 1024.91 crore) and Vedanta (Rs 930.05 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 the highest trading turnovers in the day.

Most active stocks in volume terms

Vodafone Idea (Shares traded: 16.06 crore), YES Bank (Shares traded: 12.86 crore), NALCO (Shares traded: 6.06 crore), SAIL (Shares traded: 5.77 crore), Zomato (Shares traded: 5.67 crore), PNB (Shares traded: 5.50 crore), JP Power (Shares traded: 4.66 crore), Suzlon Energy (Shares traded: 4.15 crore), IDFC First Bank (Shares traded: 3.90 crore) and Tata Motors (Shares traded: 3.76 crore) were among the most traded stocks in the session.

Stocks showing buying interest

Linde India, Bajaj Finserv, Au Small Fin Bank, Praj Industries and HFCL witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure

Aptus Value Housing Finance India, Glenmark Life Sciences, Jubilant Life, Hero MotoCorp and Aurobindo Pharma witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls

Overall, the market breadth remained in favour of the bulls. As many as 379 stocks on the BSE500 index settled the day in the green, while 119 settled the day in the red.

Podcast: Sensex, Nifty at peak; what’s next for markets?
Sensex added more than 400 points, but the BSE barometer closed just 40-odd points below the 56,000 level. Nifty50 settled at 16,625, about 128 points higher. Both the indices closed at lifetime highs. What triggered Tuesday’s strong gains? what’s next for markets?

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