Ahead of the Market: 10 things that will decide D-Street action on Thursday

Indian benchmark stock indices closed in the green for the fourth consecutive day on Wednesday on buying in HDFC Bank and a largely firm trend in Asian markets. Fag-end buying helped the BSE Sensex climb 100 points to settle at 65,880.52. During the day, it had declined 292 points to 65,488.03. Global stocks faced headwinds due to slowing growth in Europe and China.

The Nifty advanced 36 points to end at 19,611.05. Meanwhile, Nifty Bank ended in the red, and broader markets underperformed their headline peers after several days of gains.

Here’s how analysts are interpreting the market sentiment:

“A spike in crude oil prices sent shockwaves across the globe, rekindling concerns about inflation and sparking fears of a Fed rate hike. This led to a surge in U.S. bond yields, prompting investors to seek safety in bonds and reversing the trend of foreign investors buying into the domestic market. Nevertheless, the resilience of the domestic markets shone through as investors bet on an improved outlook, ultimately aiding the market’s recovery from the initial shock,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Technically, Nifty found support near 19,500 and rebounded strongly. A promising intraday reversal pattern suggests a strong likelihood of further upward momentum from current levels. For trend-following traders, the critical level to watch is 19,550; if surpassed, the index could rally to 19,650-19,700. Conversely, fresh selling pressure may emerge if 19,550 is breached, potentially leading to a decline to 19,500-19,460,” remarked Shrikant Chouhan, Head of Research (Retail) at Kotak Securities.

With that said, let’s take a look at what key indicators are indicating for Thursday’s market action:

US Market
Wall Street‘s main indexes fell on Wednesday over concerns about sticky inflation as investors awaited the Federal Reserve’s report on the U.S. economy for clues on the bank’s interest rate path. Apple was the biggest drag across the three major indexes, down 2.6% after a report said China had banned officials at central government agencies from using iPhones and other foreign-branded devices for work.

At 10:07 a.m. ET, the Dow Jones Industrial Average was down 85.80 points, or 0.25%, at 34,556.17, the S&P 500 was down 25.25 points, or 0.56%, at 4,471.58, and the Nasdaq Composite was down 125.49 points, or 0.90%, at 13,895.46.European Shares
European stocks extended losses for a sixth consecutive session on Wednesday as worries about global economic slowdown and higher crude prices spurring inflationary pressures weighed on risk sentiment.

The pan-European STOXX 600 index slipped 0.5% by 0713 GMT, hovering near a one-week low.

The global mood soured as Brent crude prices jumped to over $90 a barrel on Tuesday after Saudi Arabia and Russia extended their voluntary supply cuts, fuelling worries about persistent price pressures.

Technical View: Small Positive Candle
On the daily chart, a small positive candle was formed with a minor upper shadow and a long lower shadow. This pattern indicates significant market volatility. Following the recent breakout above the crucial resistance level of the downward sloping trend line at 19,450, Nifty has consistently moved upward, forming lower shadows in the last three sessions. The breakout above the trend line resistance remains intact.

Stocks Showing Bullish Momentum
The Momentum indicator Moving Average Convergence Divergence (MACD) has signaled bullish trades for stocks such as Castrol India, ITC, IOC, JK Paper, JSW Energy, and LIC, among others. The MACD is renowned for identifying trend reversals in securities or indices. When the MACD crosses above the signal line, it provides a bullish signal, suggesting that the security’s price may rise.

Stocks Signaling Weakness Ahead
The MACD has displayed bearish signals for stocks like RBL Bank, Arvind Ltd, Swan Energy, Dhani Services, and Parag Milk Foods, among others. A bearish crossover on the MACD indicates the beginning of a downward trend for these stocks.

Most Active Stocks in Value Terms
MRF (Rs 108,312 crore), Page Industries (Rs 40,617 crore), Honeywell Automation (Rs 39,149 crore), 3M India (Rs 32,337 crore), and Shree Cements (Rs 25,659 crore), among others, were the most actively traded stocks on NSE in terms of value. High trading activity in terms of value can help identify stocks with the highest trading turnovers during the day.

Most Active Stocks in Volume Terms
Vodafone Idea (Shares traded: 36.56 crore), Reliance Power (Shares traded: 35.83 crore), JP Power (Shares traded: 21.54 crores), IRFC (Shares traded: 20.39 crores), and YES Bank (Shares traded: 16.84 crore), among others, were the most traded stocks in the session on NSE based on volume.

Stocks Showing Buying Interest
Shares of Vodafone Idea, MMTC, Petronet LNG, R Systems, and JM Financial, among others, witnessed strong buying interest from market participants as they reached their fresh 52-week highs, signaling bullish sentiment.

Stocks Under Selling Pressure
Shares of Redtape, GNA Axles, TCNS Clothing, Penta Gold, and ASL Industries, among others, hit their 52-week lows, indicating bearish sentiment in these stocks.

Sentiment Meter Favors Bulls
Overall, market breadth favored bulls, with 1,886 stocks ending in the green while 1,766 names settled in the red.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own and do not represent the views of Economic Times.)

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