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Ahead of Market | 12 things that will decide market action on Thursday

NEW DELHI: Nifty50 on Wednesday formed a small bearish candle on the daily chart as it traded in a narrow band. Analysts said the index could find support at 17,430-17,500 points.

Here’s how analysts read the market pulse:

Shrikant Chouhan of Kotak Securities said that 17,600-17,625 levels should act as a key resistance level and that a quick intraday correction till 17,500-17,450 cannot be ruled out.

“The 17,625 level could be the range breakout level. A breakout continuation formation is likely to continue in that case up to 17,665-17,725 levels,” he said.

Mazhar Mohammad of Chartviewindia.in argued that Wednesday’s range-bound movement after a strong rebound on Tuesday suggested that vulnerability to a sharp down move remains for the index. “In the next session, weakness may materialise if the index slips below 17,500 level. In that case, the initial target is placed at 17,400, followed by 17,320. If the index manages to sustain above 17,610, the strength may extend towards the 17,700 level,” he said.

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

Wall St rebounds from recent losses

US stock indexes rebounded from recent losses on Wednesday as concerns over a default by China’s Evergrande eased, with investors now awaiting policy cues from the Federal Reserve’s meeting later in the day. At 09:47 a.m. ET the Dow Jones Industrial Average rose 206.94 points, or 0.61 per cent, to 34,126.78, the S&P 500 gained 19.63 points, or 0.45 per cent, to 4,373.82 and the Nasdaq Composite gained 33.03 points, or 0.22 per cent, to 14,779.43.

European shares rise ahead of Fed meeting

European stocks rose on Wednesday after debt-laden developer China Evergrande said it would make some interest payments, while investors awaited a signal from the U.S. Federal Reserve on how and when it will rein in its massive stimulus. The Europe-wide STOXX 600 index rose 1.0 per cent, extending Tuesday’s bounce after its worst session in two months, with commodity-linked stocks and banks leading gains.

Tech View: Nifty sends out sell signal

The Nifty50 index was largely range-bound on Wednesday but eventually closed in the red as the bullish momentum seen on Tuesday petered out. The lack of follow-up buying suggested that the index remains susceptible to selling pressure. Analysts suggested that there is a likelihood of weakness in the index for the remainder of the week.

F&O: Nifty may consolidate

The volatility index India VIX continued to remain weak on Wednesday after Monday’s sharp spike. In the options segment, some call writing was seen at 17,600 and 17,500 strike price while put writing was visible at 17,300 strike price. Options data suggested a broader trading range between 17,000 and 17,800 levels while an immediate trading range was seen between 17,300 and 17,700 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of DLF, Purvankara, Birla Soft, Bhansali Engineering, Welspun India and VRL Logistics. 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

The MACD showed bearish signs on the counters of Cholamandalam Investment, Marico, Ircon International, ICICI Lombard, BLS International, Electrosteel Castings, Zen Technologiees, New India Assurance, V-Guard Industries, Balmer Lawrie, Borosil Renewables, APL Apollo Tubes, and Apollo Micro Systems. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Zee Entertainment (Rs 6189 crore), DLF (Rs 1525 crore), Tata Steel (Rs 1448 crore), ITC (Rs 1280 crore), RIL (Rs 1231 crore), Bajaj Finance (Rs 1175 crore), Bharti Airtel (Rs 1168 crore), Godrej Properties (Rs 1119 crore), IRCTC (Rs 1074 crore) and Hindalco (Rs 1061 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 the highest trading turnovers in the day.

Most active stocks in volume terms

Vodafone Idea (Shares traded: 33 crore), Zee Entertainment (Shares traded: 19.2 crore), YES Bank (Shares traded: 9 crore), SAIL (Shares traded: 5.5 crore), ITC (Shares traded: 5.3 crore), GMR Infra (Shares traded: 4.9 crore), NALCO (Shares traded: 4.3 crore), DLF (Shares traded: 4.3 crore), BHEL (Shares traded: 3.4 crore) and Tata Motors (Shares traded: 2.95 crore) were among the most traded stocks in the session.

Stocks seeing buying interest

Zee Entertainment, VRL Logistics, Godrej Properties, DLF and Inox Leisure witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure

Inventure Growth and Servotech Power System 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 bulls. As many as 346 stocks on the BSE500 index settled the day in the green, while 154 settled the day in the red.

Podcast: How should investors approach midcaps & smallcaps?
BSE Sensex, which traded in a tight range of 300 points, shed merely 80 points to settle below the 59,000-mark. Nifty50 could not hold about 17,600 level and shed 15 points to end the day below 17,547. Broader markets outperformed as BSE midcap and smallcap indices added over a per cent each. Should investors be cautious about midcaps and smallcaps now?

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