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

MUMBAI: Nifty50 on Wednesday formed a small bearish candle on the daily chart, as the benchmark index closed lower for the second successive session. Analysts, however, see limited downside for the 50-pack as the 13-day simple moving average at 17,613 will offer firm support.

Here’s how analysts read the market pulse:

Gaurav Ratnaparkhi of Sharekhan said the index is in a consolidation mode post a brief distribution near the daily upper Bollinger Band in the last few sessions. “The hourly chart shows that the Nifty is facing resistance near the key hourly moving averages and is expected to form the next leg down from current level,” he said.

Mazhar Mohammad of said Nifty50 appears to be taking support around its 27-day old ascending channel, as it is bouncing back after testing the lower boundary of the channel for the last two trading sessions. “Most corrections in the past halted after testing the 13-day simple moving average and this average offered support thrice since August,” he said.

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

Tech stocks push Wall Street higher

Gains in beaten-down technology shares and Boeing led U.S. stock indexes higher on Wednesday, after concerns about inflation and rising Treasury yields sparked one of Wall Street’s worst selloffs this year. At 9:53 a.m. ET, the Dow Jones Industrial Average was up 156.80 points, or 0.46 per cent, at 34,456.79, the S&P 500 was up 25.21 points, or 0.58 per cent, at 4,377.84 and the Nasdaq Composite was up 114.56 points, or 0.79 per cent, at 14,661.24.

European stocks rise on AstraZeneca strength

European stocks rose on Wednesday after one of the worst market routs this year as AstraZeneca lifted healthcare stocks on a deal to buy a rare disease drugmaker, while chip equipment producer ASM gained on an upbeat earnings forecast. The pan-European STOXX 600 index rose 0.6 per cent, with investors gradually looking past a 2.2 per cent fall in the previous session.

Tech View: Support seen at 17,800

The Nifty50 index formed lower high-low formation on the daily charts for the second straight session and analysts believe the index will witness consolidation in the short-term at 17,400-17,900 range.

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

Traders heavily sold the 17,800-strike price call option of the Nifty50 index expiring on October 7, which reflects that they don’t see much upside potential going ahead. On the put options side, 17,600 held the highest open interest and the level could act as near-term support. The elevated levels of the volatility gauge India VIX will keep traders cautious for the time being.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Trident, Bank of Baroda, PTC India, Bank of India, Sun Pharma and NMDC. 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 Bharat Electronics, IDFC, IRCTC, Birla Soft, L&T, Brigade Enterprises, L&T Infotech, V-Guard, KPR Mill, Jamna Auto, Balkrishna Industries, Eicher Motors, and Bajaj Finserv. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Max Health (Rs 3367 crore), HDFC AMC (Rs 2129 crore), Tata Power (Rs 1904 crore), Coal India (Rs 1891 crore), SBI (Rs 1757 crore), Sun Pharma (Rs 1487 crore), IEX (Rs 1371 crore), Godrej Properties (Rs 1318 crore), Infosys (Rs 1311 crore) and HDFC Bank (Rs 1297 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: 32.4 crore), YES Bank (Shares traded: 19.5 crore), BHEL (Shares traded: 13.1 crore), Tata Power (Shares traded: 12.7 crore), PNB (Shares traded: 10.4 crore), Max Health (Shares traded: 9.6 crore), SAIL (Shares traded: 8.0 crore), NTPC (Shares traded: 7.6 crore), ONGC (Shares traded: 6.8 crore) and GMR Infra (Shares traded: 6.6 crore) were among the most traded stocks in the session.

Stocks seeing buying interest

Godfrey Phillips, Oil India, Tata Power, IRB Infra Developers and Sterling Wilson Solar witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

CarTrade Tech, Suvidha Infoserve, Opto Circuits and Inventure Growth 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 281 stocks on the BSE500 index settled the day in the green, while 219 settled the day in the red.

Podcast: Which sectors are giving best value now?
Sensex closed some 250 points lower at 59,400-odd levels. Nifty50 edged 0.2 per cent lower to stay above the 17,700 mark. A total of 18 Sensex stocks ended lower, with HDFC, Kotak Mahindra Bank, Asian Paints, UltraTech Cement, HUL and HDFC Bank falling 1-2 per cent. ICICI Bank and TechM also declined over 1 per cent. This was, however, in contrast to the broader market trend, where two out of every three stocks ended higher for the day. Which are the sectors that look attractive on valuation basis?

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