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

MUMBAI: Nifty50 on Thursday formed a small bearish candle on the daily chart as the benchmark index closed lower for the third successive session. Analysts said the index closed below its 13-day simple moving average, signalling more pain ahead.

Here’s how analysts read the market pulse:

Independent analyst Manish Shah said the index is at make it or break it level. “MACD has moved further into the sell mode and the RSI has dropped below the 70 level. This is suggesting a loss in momentum. For Nifty50 to trade higher, it needs to break above 17,780-17,800,” he said.

Mazhar Mohammad of Chartviewindia.in said that the index appears to have decisively closed below the daily trendline, which was in progress from the low of 15,513 registered on July 28 and seems to be consolidating inside the long lower shadow registered on September 28, whose value is placed in 17,748 -576 range.

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

Wall Street climb higher

Wall Street’s main indexes rose on Thursday at the end of a bruising month as investors kept a close watch on funding negotiations in Washington to prevent a government shutdown. At 9:45 a.m. ET, the Dow Jones Industrial Average was up 13.29 points, or 0.04 per cent, at 34,404.01, the S&P 500 was up 13.12 points, or 0.30 per cent, at 4,372.58, and the Nasdaq Composite was up 83.65 points, or 0.58 per cent, at 14,596.09.

European shares end flat

European stocks ended flat on Thursday as declines in travel and leisure limited gains in miners, while ending the month with falls of over 3 per cent on worries about a slowing global economy and higher inflation. The pan-regional STOXX 600 index was 0.05 per cent lower, with miners rising 2.0 per cent and travel stocks falling 2.2 per cent.

Tech View: Support seen at 17,800

Nifty50 formed lower highs and lows on the daily charts for the third straight session and analysts suggested that it was time to become cautious on the market going forward. Analysts suggested that index will now remain vulnerable to sell-off unless it closes above 17,748 points.

F&O: Out-of-money put writing a concern

The October derivative series began on an indecisive note for traders as positioning in the options of the Nifty50 index were scattered. Maximum open interest in call options stood at 18,000 strike price while the same in put options was at 17,000 strike price. Analysts said that the immediate trading range stood between 17,350 and 17,850 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of SAIL, Federal Bank, Jindal Steel, Spencer’s Retail, Sequent Scientific and Triveni Turbine. 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 Tata Motors, SpiceJet, Arvind, Piramal Enterprises, KEC International, Tin Plate, Sonata Software, Avenue Supermarts, Neogen Chemicals, Mazagon Dock, Akash Infraprojects, PRG Life Sciences, and Ramco Industries. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Tata Power (Rs 1743 crore), RIL (Rs 1579 crore), ICICI Bank (Rs 1301 crore), HDFC Bank (Rs 1274 crore), IEX (Rs 1245 crore), SBI (Rs 1212 crore), Vodafone Idea (Rs 1184 crore), Infosys (Rs 1163 crore), HDFC (Rs 1155 crore) and Bajaj Finance (Rs 1136 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 highest trading turnovers in the day.

Most active stocks in volume terms

Vodafone Idea (Shares traded: 100 crore), Tata Power (Shares traded: 11.1 crore), BHEL (Shares traded: 8.5 crore), PNB (Shares traded: 8.4 crore), IOB (Shares traded: 7.9 crore), YES Bank (Shares traded: 6.8 crore), IDBI Bank (Shares traded: 6.2 crore), Trident (Shares traded: 6.2 crore), SAIL (Shares traded: 5.9 crore) and Central Bank (Shares traded: 5.3 crore) were among the most traded stocks in the session.

Stocks seeing buying interest

PNC Infratech, IRB Infra Developers, Tata Investment, Aditya Birla Retail and Can Fin Homes witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Shrenik, Inventure Growth, BKM Industries and Suvidha Infoserve witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on these counters.

Sentiment meter favours bears

Overall, the market breadth remained in favour of the bulls. As many as 268 stocks on the BSE500 index settled the day in the green, while 232 settled the day in the red.

Podcast: What made PSU banks rally?
Domestic equity continued to settle lower on Thursday led by rising volatility ahead of F&O expiry of September series. Rising dollar and Evergrande crisis added to the woes of traders. IT, metal, private lenders and media stocks added pressure on the benchmark indices, whereas realty players and PSU lenders saw some buying action. What made PSU banks rally today? Should one consider them for investment?

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