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

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

NEW DELHI: Domestic equity indices managed to end flat on Friday after a smart recovery in telecom and select financial stocks in the second half of the session helped the indices recover most of day’s losses. Selling pressure in metal, power and oil & gas stocks, however, limited the upside.

Nifty moved in a wide range of 311 points and formed a ‘Hammer’ candle on the daily chart and an indecisive ‘Doji’ on the weekly scale. Analysts said the index will need to take out key resistance levels to witness any further up move.

Here’s how analysts read the market pulse:-

Mazhar Mohammad of Chartviewindia.in said unless Nifty50 registers a sustainable close above 15,761 level, it should remain vulnerable to selloffs. “Levels above 15,761 could initiate a sideways trend in the 15,900-15,600 range,” he said.

However, Sumeet Bagadia of Choice Broking said a ‘Hammer’ pattern indicates a further upward move. “On the hourly chart, the index has turned upward from the oversold level, which suggests positive moves for the forthcoming session. Nifty50 has immediate support at 15,430 and resistance at 15,900,” he said.

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

US stocks fall after hawkish Bullard comments
US stocks ended sharply lower on Friday, with the Dow and S&P 500 posting their worst weekly performances in months, after comments from Federal Reserve official James Bullard that the US central bank might raise interest rates sooner than previously expected spooked investors. On Friday, the Dow Jones Industrial Average fell 533.37 points, or 1.58%, to 33,290.08, the S&P 500 lost 55.41 points, or 1.31%, to 4,166.45 and the Nasdaq Composite dropped 130.97 points, or 0.92%, to 14,030.38.

European shares deepen losses
A slide in European bank and energy stocks was exacerbated by hawkish comments from a Federal Reserve official, which also saw the STOXX 600 index snap a four-week winning streak as fears of US policy tightening came to the fore. The pan-European STOXX 600 index ended 1.6% lower in its worst day in five weeks, with bank and energy stocks leading declines. The index also dropped 1.2% this week.

Tech View: Nifty forms Hammer candle on daily charts
Nifty50 on Friday declined for the third straight session. It formed a ‘Hammer ‘candle on the daily chart and an indecisive ‘Doji’ on the weekly scale. Analysts said the range of 15,430-450 will be a crucial support to defend. They see the immediate resistance for Nifty50 at 15,761 level. Independent analyst Manish Shah said that the 50-pack index saw a sharp reversal in the closing hours of trade, as it bounced back from 15,450 level. It was the crucially important 38.2 per cent retracement of April 22 low of 14,151 level to the all-time high of 15,901 level.

Check out the
candlestick formations in the latest trading sessions

F&O: Falling VIX hinting at overall bullish bias
India VIX fell 3.22% from 15.28 to 14.79 level. The fear gauge had come to these levels in February 2020, when it spiked to higher zones. Lower volatility indicates an overall bullish market bias, but a small bounce in VIX can give some volatile cues to the market. On the options front, maximum Put Open Interest stood at 15,000 level followed by 15,500 while maximum Call OI was seen at 16,000 level followed by 15,800.There was Call writing at strike prices 16,200 and then 15,700 while minor Put writing was seen at 15,000 and then 15,600 levels. Options data suggests Nifty trading range in between 15,400 to 16,000 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Jammu & Kashmir Bank, India Cements, Sun TV Network, Chambal Fertiliser, TCNS Clothing, Alembic, Dhani Services, Tilaknagar Industries, Tera Software, Vardhman Acrylics, Orient Abrasives, JBF Industries, Venus Remedies, Goldiam International, ABB India, Blue Star, Rajratan Global Wire, Sharda Motor Ind and Renaissance Global.

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 ONGC, Steel Authority, NTPC, Power Grid Corporation, L&T Finance Holdings, Hathway Cable & Data, Power Finance, NHPC, NCC, IFCI, Infibeam Avenues, Jindal Stainless, Tata Motors, PTC India Financial, HUDCO, Tata Chemicals, Gujarat Pipavav Port, Torrent Power, ICICI Pru Life, Aditya Birla Fashion, Titan Company, Embassy Office Parks, Glenmark Pharma, Adani Power, Max Financial Services, Muthoot Finance, Escorts, IRCTC, Arvind, Godrej Properties, Majesco, PVR, ICICI Securities, MindTree, Spencer’s Retail, Kitex Garments, Dalmia Bharat Sugar, Aptech, Dhanuka Agritech, Oracle Financial Services and Metropolis Healthcare. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Friday’s most active stocks in value terms
SBI Cards (Rs 5,265.76 crore), Adani Ports SEZ (Rs 5,142.38 crore), Tata Steel (Rs 4,363.70 crore), Adani Enterprises (Rs 4,342.16 crore), RIL (Rs 3,004.16 crore), Infosys (Rs 2,032.60 crore), SBI (Rs 1,879.22 crore), Tata Motors (Rs 1,667.58 crore), Bajaj Finance (Rs 1,643.01 crore) and TCS (Rs 1,119.77 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.

Friday’s most active stocks in volume terms
Vodafone Idea (Shares traded: 80.76 crore), Suzlon Energy (Shares traded: 27.37 crore), JP Power (Shares traded: 25.67 crore), Reliance Communication (Shares traded: 19.25 crore), GTL Infra (Shares traded: 11.88 crore), PNB (Shares traded: 11.74 crore), YES Bank (Shares traded: 10.54 crore), ONGC (Shares traded: 8.79 crore), SAIL (Shares traded: 8.75 crore) and BHEL (Shares traded: 8.54 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Tata Telecommunication, Crisil, Dixon Tech, Minda Industries and United Spirits witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Anmol India and Arihant Capital witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears
Overall, the market breadth remained in favour of the bears. As many as 129 stocks on the BSE500 index settled the day in the green, while 370 settled the day in the red.

Podcast: Stocks & sectors to avoid in a volatile market?
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Last week was a reminder of how risky investing in smallcaps can be in a declining market. While Nifty fell just 0.73 per cent in five days, Nifty Smallcap 100 slipped over 3 per cent. The rising India VIX levels are also a sign of increasing nervousness among traders, particularly after the Fed policy outcome. So in today’s special podcast with independent market expert Rajiv Nagpal, let us try to understand which pockets of the market you should avoid at this point.

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