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

NEW DELHI: Indian stocks have seen some recovery in the market as investors grabbed stocks at low valuations. Analysts also believe this is the right time to pick quality stocks at cheap valuations.

Here’s how analysts read the market pulse:

Mazhar Mohammad of Chartviewindia.in said that the daily candle resembled a Hanging Man, indicating indecision among market participants. But a key positive development on the technical charts is the fact that the Nifty50 closed above the 20-day simple moving average, he said.

“The daily chart shows that the recent dip found support near 78.6 per cent retracement level, which was near 15900. Thereon the index witnessed fresh buying support. On the way up, it has crossed certain near term hurdles and is now once again approaching the crucial 16400 mark. The index has been facing resistance near 16,400 for the last three weeks. Once it is crossed on a closing basis, the index will be set to target 16,620 on the upside,” said Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan.

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

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Wall Street rallies, snaps longest weekly losing streak in decades

Wall Street closed sharply higher on Friday as signs of peaking inflation and consumer resiliency sent investors into the long holiday weekend with growing optimism that the Federal Reserve will be able to tighten monetary policy without tipping the economy into recession. All three major US stock indexes brought a decisive end to their longest weekly losing streaks in decades. The S&P and the Nasdaq suffered seven consecutive weekly declines, the longest since the end of the dot-com bust, while the blue-chip Dow’s eight-week selloff was its longest since 1932.

European shares close higher

European stocks closed higher on Friday, scoring a positive week as fears over monetary policy tightening subsided slightly. The pan-European Stoxx 600 provisionally closed up by 1.5%, with tech stocks adding 3.2% to lead gains as most sectors and major bourses entered positive territory. UK’s FTSE 100 inched higher on Friday, recording its best weekly showing since mid-March, although oil and gas stocks came under renewed pressure after the UK government’s windfall tax plan this week.

Tech View: Bullish candle

Nifty50 on Friday breached its 20-day simple moving average (SMA) and settled above the 16,350 level and formed a bullish candle on the daily chart and a ‘Hammer’ candle on the weekly chart, hinting at a reversal ahead.

F&O: Support at 16,000

On the call side, the biggest open interest is at 17000 followed by 16500, meaning these are two resistance levels. On the put side, open interest converges at 16,000, followed by 16,300, providing support.

Stocks showing bullish bias

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

, IndiaMart, , , and EID Parry.

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

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

Most active stocks in value terms

(Rs 1973 crore), HDFC Bank (Rs 1663 crore), Infosys (Rs 1203 crore), TCS (Rs 1100 crore), (Rs 976 crore), (Rs 841 crore) and Adani Power (Rs 818 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

Vodafone Idea (Shares traded: 13 crore), Paradeep Phosphates (Shares traded: 10 crore), ONGC (Shares traded: 5 crore), Suzlon Energy (Shares traded: 5 crore), YES Bank (Shares traded: 5 crore) and SAIL (Shares traded: 4 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest

Blue Dart witnessed strong buying interest from market participants as it scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure

Piramal Enterprises,

, , Nesco Ipca Labs and 3M India witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on the counters.

Sentiment meter favours bulls

Overall, market breadth favoured gainers as 2,182 stocks ended in the green, while 1,153 names settled with cuts.


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