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

NEW DELHI: Nifty50 on Wednesday formed a bearish candle on the daily chart but continued to make higher high-low formations. During the day, the index faced pressure as it neared 61.8 per cent retracement of the recent fall. The index eventually closed almost at its 5-day exponential moving average. Analysts said the index may see some consolidation in the coming days.

Here’s how analysts read the market pulse:

Independent Analyst Manish Shah said he would continue to be watchful of the market and would await a breakout of the resistance at 18,350 for any upside. “Support for the Nifty50 is at 17,950. If this support gets taken out, we may see a decline to 17,800 or lower. We expect Nifty50 to remain subdued due to the October expiry on Thursday. It may trade in a range for a day or two,” Shah said.

After Wednesday’s profit-booking, more weakness should be expected on Nifty50, provided it slips below 18,099 in the next trading session, said Mazhar Mohammad of “Sustaining a level below 18,099 may drag the index towards the swing low of 17,968 levels. Contrary to this, an intraday strength can be expected if the index sustains above 18,342 levels,” he said.

US stocks climb higher

The Nasdaq led gains among Wall Street indexes on Wednesday after a robust forecast from Microsoft supported optimism about the third-quarter earnings season, while a decline in oil prices hurt shares of energy companies. The S&P 500 index and the Dow Jones Industrial Average struggled for direction in the first hour of trading, with seven of the 11 major S&P 500 sectoral indexes falling. At 10:25 a.m. ET, the Dow Jones Industrial Average was down 33.66 points, or 0.09 per cent, at 35,723.22, the S&P 500 was up 1.19 points, or 0.03 per cent, at 4,575.98, and the Nasdaq Composite was up 59.99 points, or 0.39 per cent, at 15,295.70.

Miners drag European stocks lower

European stocks slipped from near-record highs on Wednesday, with miners leading losses after concerns over China hit metal prices, while mixed corporate earnings reports and an upcoming central bank meeting kept investors on edge. The pan-European STOXX 600 closed 0.4 per cent lower at 474.04 points after coming close to a record high on Tuesday.

Tech View: Nifty likely to consolidate

Analysts said that the Nifty50 rise in the last couple of sessions is showing overlapping structure on the hourly chart. This means that it is a part of the consolidation process. On the downside, the Nifty50 can revisit the crucial mark of 18,000 where it is expected to take support near the 20-DMA. On the higher side, Wednesday’s high of 18,342 will now act as a near-term barrier. Overall, the Nifty50 is expected to continue with the short-term consolidation,” Ratnaparkhi said.

F&O: Nifty to trade in 18,000-400 range

On the options front, the maximum put open interest is at 18,000 strike followed by the 18,200 strike. The maximum Call open interest is at 18,500 followed by the 18,300 strike. Call writing is seen at 18,300 and 18,350 strikes while Put writing is seen at 17,950 and 18,050 strikes. Options data suggests an immediate trading range in between 18,000-18,400, said Chandan Taparia of Motilal Oswal Securities.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed a bullish trade setup on the counters of Astra Microwave, Jain Irrigation, Minda Corporation, Hikal, Asahi Glass India, Man Infraconstruction, Jindal Saw, ACC and the Ramco Cements, among others.

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 Power, SAIL, Vedanta, Central Bank, MSTC, Equitas Holdings, Sical Logistics and JBM Auto, among others. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Axis Bank (Rs 3,180 crore), Bajaj Finance (Rs 2,359 crore), IRCTC (Rs 2,222 crore), ICICI Bank (Rs 1,923 crore), Tata Power (Rs 1,787 crore) and SBI (Rs 1,535 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

YES Bank (Shares traded: 14.89 crore), Vodafone Idea (Shares traded: 12.42 crore), PNB (Shares traded: 11.68 crore), Tata Power (Shares traded: 7.85 crore), Bank of Baroda (Shares traded: 7.07 crore), IDFC First Bank (Shares traded: 5.44 crore), BHEL (Shares traded: 4.9 crore) and Canara Bank (Shares traded: 4.19 crore) were among the most traded stocks in the session.

Stocks seeing selling pressure

SREI Infra, Krsnaa Diagnostics, Aditya Birla Sun Life AMC, Spandana Sphoorty, Supreme Holdings, Roopshri Resorts and MAC Resorts hit their 52-week lows during the day, signaling bearish sentiment on these counters.

Sentiment meter favours bulls

Overall, the market breadth remained in favour of the bulls. As many as 1,755 stocks on the BSE settled the day in the green while 1,491 stocks settled the day in the red.

Podcast: Why markets succumbed to fag-end selling on Wednesday?
Domestic equity markets were back in red as benchmark indices wiped out the morning gains and ended lower after a two-day rally. Weak global cues dampened the sentiments. In-line Q2 results from India inc failed to boost morale. Selling in metals, media, financials, private lenders and auto weighed on the sentiments. Defensive sectors like PSUs, IT and pharma witnessed some buying. Markets gave up their gains in fag-end selling. What were the reasons behind it?

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