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

MUMBAI: Nifty50 on Thursday formed a long bearish candle on the daily chart as the benchmark closed lower by 2 per cent. The biggest one-day drop in the index since April also meant that it closed below its 20-day moving average for the first time in a while.

Here’s how analysts read the market pulse:

Gaurav Ratnaparkhi, head of technical research at Sharekhan said that Nifty50 recently saw a minor degree bounce that had faced resistance near 61.8 percent retracement of the first leg of the fall.

“The next leg of the correction unfolded from that key Fibonacci level. On the way down, it has broken the crucial 18,000 mark and has now reached the lower end of a falling channel on the hourly chart,” he said.

Mazhar Mohammad of that the chances of Nifty50 heading towards its 50-day moving average, whose value is placed around 17,500 levels, remains higher. “If the bulls manage to defend 17,860 level on Friday, some sideways consolidation can be expected,” he said.

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

Big Techs push Nasdaq to record high

The Nasdaq index hit a record high on Thursday, led by gains in mega-cap companies including Apple Inc and ahead of their earnings reports, while solid results from Caterpillar and Merck helped investors shrug off dismal GDP data. At 11:00 a.m. ET, the Dow Jones Industrial Average was up 202.48 points, or 0.57 per cent, at 35,693.17, the S&P 500 was up 35.65 points, or 0.78 per cent, at 4,587.33, and the Nasdaq Composite was up 145.69 points, or 0.96 per cent, at 15,381.53.

European shares inch higher

European stocks closed slightly higher on Thursday, buoyed by robust earnings from food and technology stocks, as the European Central Bank kept its massive stimulus taps open and maintained its view that a recent spike in inflation would be temporary. The pan-European STOXX 600 closed 0.2 per cent higher with food and beverage and technology sectors gaining 1.6 per cent and 1.3 per cent, respectively.

Tech View: Don’t buy the dip

Analysts said that the Nifty50 index’s inability to close above the 20-day moving average should make investors cautious about depending on the recent strategy of buying every dip in the market. Analysts said that the short-term trading range has shifted lower to 17,700-18,200 points.

F&O: Put option popularity rises

Traders aggressively bought the out-of-money put options of the Nifty50 index today indicating their bearish sentiment. The bias for put options suggested that the index could remain volatile in the next few sessions, especially, as the India VIX closed sharply higher.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of UPL, Aegis Logistics, LT Foods, Orient Cement, and Max Financial Services.

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 Axis Bank, Jindal Steel, Bank of Maharashtra, Hindustan Copper, Ujjivan Small Finance, Vardhman Acrylics, Coffee Day Enterprises, Bharta Forge, DB Realty, Karda Constructions, and Grasim Industries. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

IRCTC (Rs 5488 crore), IndusInd Bank (Rs 2073 crore), ICICI Bank (Rs 1521 crore), Axis Bank (Rs 1489 crore), United Spirits (Rs 1473 crore), HDFC Bank (Rs 1439 crore), SBI (Rs 1431 crore), Tata Power (Rs 1424 crore), PNB (Rs 1356 crore) and Adani Ports (Rs 1272 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

PNB (Shares traded: 32.1 crore), Vodafone Idea (Shares traded: 25.7 crore), YES Bank (Shares traded: 12.2 crore), Tata Power (Shares traded: 6.5 crore), Bank of Baroda (Shares traded: 6.2 crore), IRCTC (Shares traded: 5.9 crore), SAIL (Shares traded: 5.7 crore), NALCO (Shares traded: 5.3 crore), ITC (Shares traded: 4.6 crore) and IDFC First (Shares traded: 4.6 crore) were among the most traded stocks in the session.

Stocks showing buying interest: Asahi Glass, ABB India, Tanla Solutions, IndusInd Bank, Grindwell Norton and United Spirits witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Bombay Metrics, Ramco Systems, Suvidha Infoserve, and DK Enterprises 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 bears. As many as 90 stocks on the BSE500 index settled the day in the green, while 410 settled the day in the red.

Podcast: What triggered the huge selloff today?
The BSE barometer Sensex tanked about 1,160 points to settle below 60,000. It traded in a wide range of 1,300 points during the day. Its broader peer, Nifty50, settled just above the 17,850 mark as the NSE barometer bled more than 350 points. It slipped below the 17,800 mark during the day. The broader markets outperformed the headline peers but BSE midcap and smallcap indices fell up to 1.5 per cent each. Fear gauge India VIX spiked over 6 per cent, marching towards 18-level. What triggered the huge selloff in equities today? Which sectors look attractive to you after recent corrections?

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