Here’s how analysts read the market pulse:
A Dark Cloud Cover is considered to be a bearish reversal pattern by nature, said Rohit Singre of LKP Securities. “The immediate support is still placed at 17,500, followed by the 17,430 level. Immediate resistance is seen at 17,650-17,750 and profit booking is likely around the hurdle zones mentioned,” he said.
Shrikant Chouhan of Kotak Securities said the bulls may prefer to take a cautious stance near the 17,800 level as was seen on Friday. “The 17,700 level would be the immediate resistance that traders will have to look at and below the same, a correction wave is likely to continue up to the 17,450-17,350 zone,” he said.
That said, here’s a look at what some of the key indicators are suggesting for Monday’s action:
US shares close week sharply lower
US stocks ended sharply lower in a broad sell-off on Friday, ending a week buffeted by strong economic data, corporate tax hike worries, the Delta COVID variant, and possible shifts in the US Federal Reserve’s timeline for tapering asset purchases. The Dow Jones Industrial Average fell 166.44 points, or 0.48 per cent, to 34,584.88; the S&P 500 lost 40.76 points, or 0.91 per cent, at 4,432.99; and the Nasdaq Composite dropped 137.96 points, or 0.91 per cent, to 15,043.97.
European shares all for third week in a row
European stocks fell on Friday, capping their third straight week in the red as the basic resources sector was hit by declines in Anglo American, but news that Britain was mulling easing travel restrictions boosted airlines and hotel groups. The pan-European STOXX 600 index fell 0.9 per cent on the day.
Tech View: 17,500 level holds the key for Nifty
Nifty50 on Friday closed below the 17,600 level and formed a Dark Cloud Cover-like pattern on the daily chart and a bullish candle on the weekly chart. Analysts said the index may be in for some consolidation and any fall below the 17,500 may confirm weakness.
F&O: India VIX jumps 6 per cent
India VIX moved up 5.71 per cent from 14.41 to 15.23-level. A spurt in India VIX may give a volatile swing to the market. It needs to hold below the 13-level to continue the bullish momentum. Options data suggested a broader trading range between 17,300 and 18,000 levels, while an immediate trading range could be seen between 17,400 and 17,800 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Bank of India, Precision Camshafts, Radico Khaitan, Star Cement, Tata Communications, Suprajit Engineering, Gland Pharma, Indoco Remedies, Westlife Development, PNB Housing Finance, Tata Investment, Pearl Global Industries, Almondz Global Securities, Cera Sanitaryware, Sakar Healthcare, Nilkamal, Ajooni Biotech, The Peria Karamalai, The Western India and Lexus Granito(India).
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 Vedanta, Max Healthcare, Aster DM Healthcare, Tata Consultancy Services, Welspun India, Prestige Estates, Orient Paper, Spencer’s Retail, Rajesh Exports, SKF India, Oberoi Realty, Equitas Holdings, Gravita India, Mahanagar Gas, Varun Beverages, Websol Energy System, Refex Industries, Triveni Turbine, ABB India, IIFL Wealth, JK Cement, Hind Rectifiers, Aakash Exploration, CL Educate, Pfizer, Ahluwalia Contracts, KDDL, NDR Auto Components, Dangee Dums, Archidply Decor and Eurotex 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 4828.15 crore), RIL (Rs 3879.85 crore), Kotak Bank (Rs 2884.53 crore), Tata Steel (Rs 2714.99 crore), Bajaj Finance (Rs 2619.52 crore), TCS (Rs 2494.40 crore), Zee Entertainment (Rs 1932.53 crore), SBI (Rs 1907.53 crore), Bharti Airtel (Rs 1899.35 crore) and ITC (Rs 1852.07 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: 140.80 crore), YES Bank (Shares traded: 58.29 crore), PNB (Shares traded: 13.51 crore), ITC (Shares traded: 7.95 crore), Zee Entertainment (Shares traded: 7.61 crore), Reliance Power (Shares traded: 7.49 crore), Bank of Baroda (Shares traded: 6.39 crore), IDFC First Bank (Shares traded: 5.46 crore), JP Power (Shares traded: 5.16 crore) and SAIL (Shares traded: 4.91 crore) were among the most traded stocks in the session.
Stocks showing buying interest: InterGlobe, Tata Elxsi, CESC, JSW Energy and Avenue Supermart witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.
Stocks seeing selling pressure
ABM International, Ganesh Benzoplast, International Conveyors, Krsnaa Diagnostics and Shanti Overseas (India) 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 bears. As many as 239 stocks on the BSE500 index settled the day in the green, while 256 settled the day in the red.
Podcast: Are market valuations unsustainable?
Indian equity indices have been hitting fresh highs continuously with many analysts wondering if the crash is imminent. Are the current market valuations unsustainable? Where is the Nifty headed now? What are the technical charts suggesting?