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

India’s Nifty 50 and Sensex fell on Tuesday, weighed by a pullback in energy shares. The NSE Nifty 50 index fell 0.43% to 20,906, while the S&P BSE Sensex shed 0.54% to 69,551.

The blue-chip indices logged their biggest single-day percentage loss since November 1 and October 26, respectively. The Nifty had gained as much as 0.19% in the first hour of trade and hit a record high for the eighth session.

Here’s how analysts read the market pulse:
“On the higher end, call writers have built a heavy position at 21,000. On the lower end, put writers are heavily present at 20,800 and 20,900. Therefore, the Nifty is likely to remain mostly sideways to negative as long as it remains below 21,000. Only a decisive move above 21,000 might induce a resumption of the uptrend. Support is placed at 20,800, below which the index may consolidate further,” said Rupak De, Senior Technical analyst at LKP Securities.

Avdhut Bagkar, StoxBox, said, “The index trended lower throughout the trading session as the selling pressure kept intensifying and ended the trading day with the formation of a bearish engulfing pattern on a relatively higher volume. This potentially indicates a temporary arrest on the upside unless the high of 21.037 is decisively taken out. The market breadth remained discouraging as only 18 constituents from the Nifty 50 basket closed in the green.”

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

US market
Wall Street’s main indexes slipped on Tuesday following inflation data that was in line with estimates ahead of the U.S. Federal Reserve’s policy decision later in the week, while losses in energy stocks also weighed.

Consumer Price Index (CPI) rose 3.1% on an annual basis in line with estimates from economists polled by Reuters. Core prices, excluding volatile items like food and energy costs, also matched expectations, rising 4% annually.

At 9:45 a.m. ET, the Dow Jones Industrial Average was down 14.06 points, or 0.04%, at 36,390.87, the S&P 500 was down 13.23 points, or 0.29%, at 4,609.21, and the Nasdaq Composite was down 39.46 points, or 0.27%, at 14,393.03.

European shares
European shares inched up on Tuesday as investors drew comfort from softer-than-expected UK wage growth data and looked forward to a crucial U.S. inflation report later in the day.

The pan-European STOXX 600 was up 0.1% as of 0814 GMT and is eyeing a three-day winning streak.

British wage growth slowed more than expected in the three months to the end of October, steering a 0.4% gain in the UK’s benchmark index.

Tech View: Bearish engulfing pattern
By ending 91 points lower, Nifty on Tuesday formed a bearish engulfing pattern on the daily chart, suggesting a possibility of a bearish reversal.

The near-term uptrend of Nifty is still intact and the market seems to have shifted into minor profit booking mode as per a smaller time frame chart. A move below 20,850 could slide Nifty towards another support of 20,700 levels (10-day EMA), said Nagaraj Shetti of HDFC Securities.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Infibeam Avenues, VIP Industries, IRFC, Karur Vysya Bank, Swan Energy, and DLF, among others.

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 HDFC Life, Network18 Media, Can Fin Homes, Alkem Labs, FDC, and Dr Reddy’s Labs among others. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
HDFC Bank (Rs 3,009 crore), ICICI Bank (Rs 1,255 crore), Maruti Suzuki (Rs 1,137 crore), RIL (Rs 1,123 crore), UltraTech Cement (Rs 1,045 crore), Axis Bank (Rs 1,016 crore), and Infosys (Rs 901 crore) were among the most active stocks on NSE in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Most active stocks in volume terms
Tata Steel (Shares traded: 3 crore), HDFC Bank (Shares traded: 1.8 crore), SBI (Shares traded: 1.4 crore), Power Grid (Shares traded: 1.4 crore), ICICI Bank (Shares traded: 1.2 crore), HDFC Life (Shares traded: 1 crore), and ONGC (Shares traded: 1 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of HDFC Life, UltraTech Cement, Bajaj Auto, SBI Life, JSW Steel, Hindalco, and TCS among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
No major stock hit its 52-week low on Monday.

Sentiment meter favours bears
Overall, market breadth favoured bears as 2,104 stocks ended in the red, while 1,691 names settled in the red.

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

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