Ahead of Market: 10 things that will decide stock action on Monday

In the week gone by, the 30-pack BSE Sensex tanked 721.06 points or 1.32% to 53,760.78 and the Nifty slipped 171.40 or 1.06% to 16,049.20. Domestic benchmark indices witnessed a dismal trade during the week amid a record low rupee, a mixed set of quarterly earnings, and fears the US Fed is set to hike policy rates aggressively after a higher-than-expected inflation print.

Here’s how analysts read the market pulse:

Vinod Nair, Head of Research at

said that volatility has re-emerged and investors have turned their focus on upcoming Fed policy in the backdrop of heightened US inflation.

“Fall in crude prices and reduction in FII selling added optimism to the domestic market while gloomy IT results, depreciating rupee and fear of global recession are restricting sizable up move,” he added.

“The 16,000 mark is crucial not just from a sentimental or psychological point of view. It is also a very crucial support level as it is the 50-day DMA (daily moving average) of Nifty. The long-term and the medium-term outlook of the market would be positive till the time it is above 16,000. A breach below that level would give bearish signals,” Kranthi Bathini of WealthMills Securities told ETMarkets.

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

US shares mint big gains

US stocks closed sharply higher on Friday, ending several days of sell-offs with a rebound fueled by upbeat earnings, strong economic data and easing fears of a larger-than-expected interest rate hike by the Federal Reserve.

The Dow Jones Industrial Average (.DJI) rose 658.09 points, or 2.15%, to 31,288.26, the S&P 500 (.SPX) gained 72.78 points, or 1.92%, at 3,863.16 and the Nasdaq Composite (.IXIC) added 201.24 points, or 1.79%, at 11,452.42.

Rebound in European shares

Automakers and retail stocks on Friday led a rebound in European shares from a two-day rout that saw investors grapple with shifting expectations of U.S. interest rate hikes, a political crisis in Italy and recession risks.

The continent-wide STOXX 600 index (.STOXX) ended 1.8% higher after falling 2.6% in the last two sessions on worries that the U.S. Federal Reserve may hike interest rates by a bigger-than-expected 100 basis points later this month.

Tech View: Inside Bar candle on weekly chart

Nifty50 on Friday snapped a four-day losing streak and in the process ended above its 50-day simple moving average. The index formed a bullish candle on the daily chart with a long-lower wick suggesting a Hammer-like reversal candle. With this, the index has also negated its lower high-low it was making for the last couple of sessions.

That said, the index formed an Inside Bar candle on the weekly chart that signals a loss of momentum. Analysts said the index has support around 15,850 levels while they see resistance for the index above 16,200 levels. It’s a sell-on-rise market, they said.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of

, , , HDIL and Bharat Dynamics.

The MACD is known for signaling 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

, , and . Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Adani Green, TCS,

, HDFC Bank and 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

Vodafone Idea, Yes Bank, SAIL, Zomato and Suzlon were among the most traded stocks in the session on NSE.

Stocks showing buying interest

Shares of Aether Industries,

and witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Policy Bazaar, Birlasoft, HCL Tech, Wipro and NMDC witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bulls

Overall, market breadth favoured winners as 1,719 stocks ended in the green, while 1,578 names settled with cuts.

(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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